On Tuesday Chancellor George Osborne announced his emergency budget, which on the whole brings positive news for contractors and freelancers. Here’s our brief summary of the pertinent points:
If, like us, you like to keep a watchful eye on the machinations of HMRC you’ll probably know that for the past few years they have been implementing an ambitious electronic filing system – in other words, a lot of the form filling you do for the tax man now needs to be completed online.
Today the Conservative party have signaled their intention to review IR35 as part of an overall review of small business taxation – should they be elected, that is.
We’re rapidly approach 5th April and the start of the 2010/11 tax year. Last week Alistair Darling announced his predictably benign budget and confirmed what’s ahead for the upcoming tax year. Here’s our review of the 2010/11 tax announcements for contractors and freelancers.
In his speech to the Labour Party Conference, the Prime Minister, Gordon Brown announced an extension of free nursery places, to be financed by the withdrawal of the tax and National Insurance (NIC) exemptions for childcare vouchers.
The proposal is that the provision of free nursery places will be extended to two year-olds (this would be on top of the existing free childcare available to three and four year olds). It is expected that 250,000 children will benefit from this by 2015/16.
HMRC are warning employers that from May 2010 they may have to pay a penalty if they do not pay their PAYE on time. These are generally due each month, on time and in full.
HMRC will implement late payment penalties for payments due from May 2010. From then on, employers may have to pay penalties if they make more than one PAYE payment late in a tax year. The new penalties will apply to all employers, including large employers (those with more than 250 employees) who currently are subject to a Mandatory Electronic Payment surcharge.
The main rate of corporation tax which applies to companies with profits of more than £1.5 million fell to 28% from 30% from 1 April 2008.
The small companies corporation tax rate which applies to companies with up to £300,000 of profits increased from 20% to 21% from 1 April 2008. The intention was to increase this rate to 22% in 2009 but this has been deferred until 1 April 2010.
HMRC have advised that they are about to issue PAYE tax codes to employees for the 2009/10 tax year.
If you receive a coding notice it is worthwhile letting us have a copy for checking. This will enable us to ensure that you are paying the correct amount of tax on your pay and benefits and that any underpayments of tax which are being collected through a coding notice deduction are being correctly dealt with.
If you run your own company you will no doubt be aware that company law requires all companies to file a copy of their annual accounts at Companies House by their due date. Penalties become payable if these accounts are filed late. With effect from 1 February 2009 higher late filing penalties will be imposed on those companies that file their accounts late.
One of the major income tax announcements last month was the proposed increase in income tax and National Insurance rates for high income earners. A quick summary follows.
- 2009/10 – No change for this tax year!
- 2010/11 – If your earnings are between £100,000 and £140,000 you will lose one-half of your personal allowance. If your earnings exceed £140,000 you will gradually lose the remainder of your personal allowance.