Contractors could be a step closer to finding out the results of key consultations into the future of expenses tax relief and IR35. This follows confirmation by Chancellor George Osborne that the Autumn Statement, Spending Review and Office for Budget Responsibility forecast will take place on Wednesday 25 November 2015.
“The Autumn Statement is often used by the Chancellor of the day as a launch pad for important legislative and policy announcements,” highlights ContractorCalculator CEO Dave Chaplin.
“It is possible that this year’s Autumn Statement will be used by Treasury and HMRC officials to propose plans for the future of IR35 and contractor travel and subsistence expenses tax relief, as both are currently under review. There could also be further clarification of how the Dividend Tax changes will work.”
HMRC’s proposals to limit expenses tax relief, which the Association of Independent Professionals and the Self-Employed (IPSE) brands as anti-competitive, are currently under consultation, and the deadline for responses is the end of September 2015.
And the taxman has published what it has called a ‘discussion document’ asking for ideas about how IR35 could be better implemented, which also contains suggestions by HMRC that could change the rules. The deadline for stakeholders to make their views known is also the end of September.
“It is almost certainly no coincidence that the deadline for both of these consultations is the end of September,” continues Chaplin, “as that gives HMRC just under two months to prepare its proposals to take IR35 and contractor expenses forward in time for the Chancellor to announce at the Autumn Statement.”
The Summer Budget 2015 shocked the contracting community with its proposals to implement Dividend Tax changes that will cost contractors thousands in extra income tax when they come into force from April 2016.
The changes will force contractors who historically paid dividends below the higher rate tax band to pay income tax for the first time. Contractors can use ContractorCalculator’s Dividend Tax Changes Impact Calculator to work out how much extra tax they will pay from 6 April 2016.
“I’d like to think that the government and HMRC have nothing further to throw at the contracting sector, as it is safe to say that 2015 has been the worst year for contracting since IR35 was introduced in 2000.
“But contractors should be prepared for further unwelcome proposals in the Autumn Statement that may feature changes to how IR35 works and the abolition of tax relief for limited company and umbrella company contractors.”
Chaplin concludes: “Contractors have only a few more weeks to make their views known, and I would urge all limited company and umbrella company contractors and freelancers to make their views known.”
Contractors who want to submit their views on IR35 have until 30 September 2015 and should email their contribution to the discussion to ir35.reform@hmrc.gsi.gov.uk.
Contractors wishing to respond to the expenses consultation should email consultation.intermediaries@hmrc.gsi.gov.uk, plus IPSE is running a survey and is keen to have input from all contractors, not just their members.