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Is George Osborne paving the way for the future of contracting

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Were you a worried contractor in the lead up to the Autumn Statement? Has George’s silence left you feeling a renewed optimism for 2016? Or do you think he’s a wolf in sheep’s clothing?

I’ve been reflecting on the aftermath from Wednesday lunchtime and what could be next for IR35, travel and subsistence (T&S) and supervision, direction or control (SDC). 

The end of a week which started amid unrest for contractors created by weeks of speculation by the media and second guessing but which ended with a cautious sigh of relief as there were no big announcements to shake the temporary workforce.

We heard nothing about IR35 and only in scouring the Blue Book on Wednesday afternoon did we see any intentions towards T&S expenses reform. What we got was a Spending Review packed with pledges that said what much of the British public wanted to hear, about  investment in housing, health, infrastructure, security, aerospace and automotive. It was reassuring to hear Osborne pledge £1.3bn to modernising HMRC’s tax administration into a world leading system. These projects may well pave the way for IT contractors to apply their specialist skills where and when they are needed - which proves exactly why the UK’s flexible workforce is valuable and must not be squashed. Perhaps Wednesday’s speech shows that government has woken up and realised this, rather than applying quick fix half baked solutions that would have dire long term consequences.

Many influencers across the industry are claiming that Osborne’s IR35 silence is down to their lobbying and powers of persuasion. But we need to keep up the fight and promoting ideas for sensible and practical solutions. We mustn’t kid ourselves that the topic is dead and buried. Osborne’s Autumn Statement was certainly a crowd pleaser and means that personal service company (PSC) workers can breathe a sigh of relief for now. However there is no doubt that we can see further changes on the horizon and shortly after the Statement HMRC confirmed they are still considering options. Changes in the law and further consultations mean these matters are not entirely closed.  It’s highly unlikely any changes will come about in April 2016, meaning April 2017 will now be the month that we could see changes. That gives experts such as Intouch to continue in the debate and help shape the future in contractor’s best interests. We’ve already been putting our thinking caps on to work out the direction all this is heading - download our Autumn Statement summary which gives you an insight into the direction we think IR35 and T&S are heading and the role of SDC, plus it contains all the facts you need to know.

What is clear from Wednesday’s announcements is that Umbrellas as we know them will no longer exist and their demise is set to continue over the coming months. The clamp down on tax relief for T&S expenses means that what was once billed as an advantage for many working through an Umbrella will no longer exist after 6 April 2016. The advice to any contractor, especially if you are a skilled IT contractor, who plans to contract for the long-term and enjoy the benefits of flexible working, is that it is wise to explore your options and work out whether these rules may affect you. At Intouch Accounting our specialist advisers can help you navigate your options - we’d love to talk to you so please drop us a line!

We’ll know more on 9th December when proposed legislation is released and rest assured Intouch will be keeping a close eye on the detail and interpreting what it means for UK contractors. Our clients benefit from our expertise in analysing the possibilities and practical application so they can focus on the job in hand and contract with confidence.We’re committed to contractors and work with over 2,000 every day. As an Intouch client you’ll get the best expert accountancy you need translated in a way you’ll understand. We’d love to tell you more. Contact us today.

Source: Intouch Accounting

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Paul Gough

Paul Gough is the Managing Director of Intouch, which is a specialist provider of accounting and tax solutions to UK contractors and freelancers trading through Personal Service Companies.

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