Surviving the credit crunch: a guide for contractors, freelancers and consultants

With global economies spiraling out of control, stock market volatility, banks going bust and talk of imminent recession, businesses and individuals are justifiably a little worried.

Whether you’re a contractor, freelancer or consultant you are perhaps a little more worried than most as you are more likely to get a tap on the shoulder before any permanent employees see redundancy. However you are no different to anyone else as bills still have to be paid, so what can you do now to stand the best chance of surviving the challenging times ahead?

The latest email based scam – HMRC self assessment tax return

The latest email based scam is in circulation whereby people are receiving an e-mail that claims to come from HM Revenue and Customs, which advises recipients they are due a tax refund. The mail directs users to a fake web site (hosted outside the UK) designed to have the same look and feel as the genuine HMRC site, using the same logos etc. The scam attempts to take advantage of the imminent deadline for online applications of tax returns (31st January 2009).

Reprieve for ‘gas guzzling’ motorists

Gas guzzling motorists saw a temporary reprieve in the 2008 Pre-Budget Report. Reforms announced in the March 2008 Budget to incentivise the manufacture and encourage the purchase of more fuel efficient cars were reconsidered to soften the blow to motorists. However, the reprieve is only temporary. For those considering the purchase of a new car, it is still worth thinking green.

State Pension Forecast

Do you know how much your state pension could be when you retire? The Pensions Service will provide a forecast of this information either by letter or an online email service.

As detailed on their website a State Pension forecast gives you in today's money values:

  • an estimate of basic and additional State Pension you may get based on your National Insurance Contributions so far and
  • an estimate of basic and additional State Pension you may get when you claim your State Pension.

Christmas parties

Are you planning a party for your staff? Then make sure you are clear on the tax implications.

The good news is that, unlike entertaining customers, the cost of employee entertaining is generally allowable against the profits of the business.

What about the employees themselves? Is it a perk of their jobs and will they be subject to tax?

Fake HMRC emails

HMRC are warning taxpayers that they are aware of a high number of emails being sent out offering a tax rebate. The warning confirms that HMRC do not email taxpayers advising them of tax rebates or invite them to complete an online form to receive a rebate.

The advice goes on to say that anyone receiving such an email should not visit the website contained within the email or disclose any personal or payment information.

Temporary exemption on stamp duty land tax

In a move to help the property market and first time buyers, Alistair Darling has introduced a Stamp Duty Land Tax (SDLT) exemption or holiday for purchases of residential property from 3 September 2008 to 2 September 2009 (inclusive). The exemption effectively raises the current nil rate band of £125,000 (£150,000 in disadvantaged areas) to £175,000 for the period of one year only.

CBI forecast a shallow recession

A CBI forecast has predicted a ‘shallow recession’ during the final part of 2008 and that growth in the economy in 2009 will be the lowest since 1992.

The CBI’s latest economic forecast has revised its growth predictions for 2008 and 2009 due to the sharper than expected slowdown over the first half of this year. Their forecast takes into account the impact of weak consumer demand, high energy and commodity prices and the effects of the credit crunch.

Extra take home pay

For many employed individuals who are checking their payslip this month it should include a welcome bonus of a £60 reduction in their income tax deduction. The reason for this is the increase in the personal allowance which finally took effect for paydays from 7 September. Don’t expect the bonus each month as the effect for October onwards will be a reduction in tax of £10 a month!

HMRC announce additional personal allowances

HMRC have now issued further guidance on the increase in the personal tax allowance which is due to take effect from 7 September 2008.

The guidance is aimed at both employers and employees. Although the increase takes effect for pay dates from 7 September onwards the change will effectively be backdated for the majority of individuals until the beginning of the tax year.