Like just about everyone in the financial sector, we tuned in yesterday to watch the Chancellor deliver his Autumn Statement. Unfortunately there were slim pickings for freelancers, contractors and micro-businesses. Although the Statement as a whole was pro-business, most of the measures introduced only benefit larger firms, and will result in little or no change for the self-employed.
There were a few items of interest to us and our clients, however.
The Personal Allowance (the amount employees are allowed to earn before they start paying tax) was due to rise from £8,105 per year currently to £9,205 in April 2013. The Government has now raised this to £9,440 from April next year.
“Taxation of controlling persons” scrapped
This proposal, which was introduced hurriedly in the summer to address the rampant abuse of Personal Service Companies in the public sector, promised to further complicate IR35 rules by mandating individuals who held senior positions in certain organisations must be on payroll.
The Government has decided that the existing IR35 rules are enough to police this problem, however ominously promised to “strengthen” existing rules to clarify the matter.
No fuel duty rise in January
Pleasingly for the motorists among us, the Chancellor has not just delayed, but entirely cancelled a planned 3 pence per litre fuel duty rise that was supposed to come into force in January.
Increased anti-avoidance activity
In line with announcements earlier in the week, the Chancellor promised £77 million to HMRC to aid with their anti-avoidance activity. According to the latest figures revenue clawed back from tax avoiders is up to £7 billion annually, with prosecutions up 80%. This is bad news for contractors using offshore Umbrella Companies, although it will not affect Crunch clients.
For those looking to pump money into their business, the Annual Investment Allowance will jump tenfold for two years, from £25,000 to £250,000. This will not be relevant for the vast majority of our clients, but for people who are planning a large purchase the increase could come in handy.
Small Business Bank
The Government has announced it is pushing ahead with plans for a a Small Business Bank, which will oversee their various spending and investment schemes. Details are not forthcoming as yet, however the Chancellor has announced it will launch with £1 billion in funding.
Our accountant team are still mulling over the finer points of the Autumn Statement, and our clients will be the first to know if we find anything of note!