Summer Budget 2015 - overview for contractors

Contractors, freelancing, micro business and self-employment

► Raise tax rates on dividends from April ‘16 – £5k tax-free, then 7.5%; 32.5%; 38.1%

► Remove the NIC Employers’ Allowance for directors who are their firm’s sole employee

► Launch a consultation into IR35’s effectiveness and consult with employers

► Block tax relief on T&S expenses for ‘SDC’ contractors from April ‘16

► Cut corporation tax to 19% in 2017 and 18% in 2020

► Put the OTS on a permanent footing and commission it to review taxation of small companies

► Ask OTS to review the closer alignment of income tax and NI

► Consult in 2015 on abolishing Class 2 NI and reforming Class4 NI

► Introduce statutory exemption for trivial benefits in kind from April ‘16

► Freeze fuel duty & cap the hike in regulated rail fares to RPI for this parliament’s term

► Actively monitor the growth of salary sacrifice schemes that reduce employment taxes

Tax and Avoidance

► Give HMRC £800m to raise £7.2bn by combating fraud, avoidance and the hidden economy

► HMRC to respond to consultation on ‘closure notices’

► Introduce legislation to enable HMRC’s direct recovery of debts power

► Publish a consultation into serial avoiders who keep entering failed avoidance scheme

► ‘Name & Shame’ serial avoiders

► Abolish ‘non-dom’ tax status for individuals in the UK for 15 of the last 20 years

► Raise personal allowance to £11,000 from April ‘16

► Raise higher rate threshold to £43,000 from April ‘16

► Give HMRC the power to acquire data from online intermediaries to combat hidden economy

► Remove the ability for companies to use UK losses and reliefs against a CFC charge

► HMRC to publish a roadmap in 2015 showing how tax admin for small firms will change

► Legislate to refund to eligible public bodies the VAT incurred on specified shared services

► From today, restrict the corporation tax relief a company obtains for the cost of ‘goodwill’

SMEs, Employers, Commerce & the Sectors

► Make permanent the AIA at a level of £200,000 from January ‘16

► Hike NI Employment Allowance to £3k (but ban it for directors who are the sole employee)

► Introduce a new Apprenticeship Levy on all large firms from April 2017

► Phase out bank levy but introduce 8% corporation tax surcharge on bank profits

► Introduce final legislation implementing two major reforms to the SME lending market

► Consult on Sunday trading laws

► Expand the North Sea investment and cluster area allowances

► Invite bids for a new round of Enterprise Zones in England

► Introduce a National Living Wage

► Restrict public sector pay awards to 1% over next 4 years

► Allocate up to £10m to the broadband programme from April ’16 to connect South West Eng

► Invest £23m in Next Generation Digital Economy Centres over 6 sites in 6 cities

► Establish a network of National Colleges to provide high quality professional and technical routes into employment.

Misc

► Remove all £1million family homes from IHT

► Introduce new vehicle excise duty rates

► Freeze working age benefits for 4 years

► Reduce tax credits threshold

► No future tax/universal credit for families with more than two children 

► Extend free childcare entitlement to 30 hrs a week for parents of 3&4-year-olds

► Defer MOT tests until cars are 4 years old

► Increase the level of Rent-a-Room relief from £4,250 to £7,500 from April ‘16

► Impose ‘earn or learn’ obligation on universal credit recipients aged 18-21

► Retain the current duty exemption for small cider producers

Editor's Note: Further Reading on Summer Budget 2015 -

Summer Budget 2015 hits PSC contractors, hard

Osborne in four-fold attack on contractors

How Summer Budget 2015 affects contractors' money

Summer Budget 2015 - chancellor's full speech