The Chancellor, George Osborne, yesterday gave his final Autumn Statement before the next General Election.
The Chancellor was upbeat about the long term future of the economy and spoke about supporting economic growth whilst reducing the deficit. The Chancellor recognised that the Government needed to support hard working individuals which is reassuring for our contractors to hear but there weren't a huge amount of measures introduced that could be said to affect contractors directly.
Those that do include:
As always there was reference to maximising tax revenues and dealing with non-compliance. Contractors running their own limited companies will be relieved to note that there was no mention of changes to IR35 rules (which are already complicated enough) or to review employment status generally.
Umbrella contractors may have noticed that the Chancellor announced a general review of travel and subsistence schemes (including those used by umbrella companies) and specifically stated that 'the Government will stop tax relief from being claimed on reimbursed business expenses when they are paid in conjunction with a salary sacrifice scheme'. This is consistent with previous statements from Treasury and HMRC on 'pay day by pay day models' which use salary sacrifice to take salaries below minimum wage so this is nothing new.
It should be noted (and this is missed by many commentators) that compliant umbrella companies such as PayStream do not use salary sacrifice schemes. PayStream both contractually and in practice guarantees the payment of national minimum wage to contractors and provides support and employment rights to contractors which is consistent with the Government's objective to protect workers.
Julian Ball, Legal Director of PayStream commented "We welcome any action to stamp out non-compliant schemes and are fully committed to working with HMRC and Government to ensure that contractors enjoy the benefits of being an employee, claim only appropriate expenses and pay the correct amount of tax. This benefits both the contractor and HMRC."
You can view the complete Autumn Statement here.