Posted Spring Budget 2016 byin
An IPSE (the Independent association for Professionals and Self Employed) article I read the other day put it very succinctly when it said that contractors and small business owners must have woken up the day after the budget feeling like they had been mugged.
The scrapping of the dividend credit scheme and the introduction of new taxes on dividends is a 7.5% kick in the teeth to anyone remunerating themselves with dividends.
We also heard more threats about tightening up on “disguised employment” which probably means at worst yet more tinkering with the IR35 legislation that will muddy the waters further and a threatened Summer Campaign by HMRC to scare contractors and freelancers out of their limited companies.
We saw an attack on the travel and subsistence expenses claimable by close company directors and their family. If you are “supervised, directed or controlled”, then you will be capped to expenses of £300. Are supervised directed or controlled properly defined? Are the same or different from IR35 case law? Who knows? Only time will tell.
We also saw the usual threats made by the government to further crack down on tax avoidance. Firstly if tax legislation was simpler, legally clearer with fewer concessions made for self interest groups, then there would be less appetite for advanced tax planning and “aggressive” avoidance. Instead, we think that business owners are now more likely to explore more “edgy” tax planning. (BTW tax avoidance is actually legal). I have heard a very senior QC express the view that the judiciary are increasingly dissatisfied that HMRC appear to be making up their own law in response to the increasing latitude being given to them by anti-avoidance tax legislation.
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