Surely it can’t have been a year since Chancellor Philip Hammond brandished the big red box outside of Number 11? You’re right, it isn’t – it’s only been 8 months since the Spring Budget, but this Wednesday (22nd November), “Spreadsheet Phil” will deliver a second Budget for 2017, to accommodate the timetable switch from Spring to Autumn.
As always, we will have an eagle eye on the Budget speech and subsequent details so that we can give you the most relevant aspects affecting our industry, contractors and agency clients.
Here are some of the points contractors in particular should look out for, both in terms of predictions and the major decisions facing the Chancellor.
The biggest issue for the contracting community is whether this year’s changes to IR35 in the public sector will be rolled out across the private sector.
This would see responsibility for determining IR35 status shift from the limited company contractor to the end client that is engaging them, as it now is in the public sector.
There has already been indications that the government will try and couch this as being in the interests of fairness and parity, but given the chaos and controversy it has caused in the public sector, there are hopes that its implementation will be delayed, at least until April 2018, with a period of consultation and analysis.
However our prediction is that extension of the off-payroll reforms is a case of when rather than if. Our big green crystal ball says we’ll be talking a lot about this in the weeks and months to come, so be sure to watch this space.
Despite being dropped from the 2017 Finance Bill, the government has reaffirmed its commitment to further reduce the dividend tax allowance from £5000 to £2000 from April 2018.
This means that limited company shareholders will be worse off by £225, £975 or £1,143 a year depending on whether they pay tax at basic rate, higher rate or additional rate. This is likely to mean that Umbrella employment will be the chosen form of engagement for contractors.
In the 2016 Budget, the government pledged to reduce the corporation tax rate from the current rate of 19% to 17% by 2020.
Some goods news for limited company workers then? Not necessarily. The Organisation for Economic Co-operation and Development (OECD) has urged the Treasury to scrap this cut and instead channel the money towards public infrastructure and training programmes.
Exactly where the Chancellor will fall on this issue, will become apparent on the 22nd.
In the Spring Budget, the Chancellor announced his intention to raise Class 4 National Insurance Contributions (NICS) from 9% to 11% by 2018.
Such was the backlash from backbench MPs, the government was forced to back-track and drop the policy.
Even so, Mr Hammond said at the time, “It remains our judgement that the current differences in benefit entitlement no longer justify the scale of difference in the level of total NICs paid in respect of employees and the self-employed.”
So, self-employed NICs are once again in the spotlight – will there be a U-turn on the U-turn?
The Chancellor will take to his feet at 12.30pm this Wednesday 22nd November, straight after Prime Minister’s questions. He will speak for about an hour, setting out the government’s plans for the economy based on the latest forecasts from the Office for Budget Responsibility (OBR).
We will be live-tweeting throughout the Budget speech and we will also have a full review available to download shortly afterwards.
Share your thoughts…
What do you think will come out of the Autumn Budget 2017? Connect with us on social media and start the discussion.