Some think that there is no room for headline-grabbing measures to be announced by the Chancellor next week; others see this as a perfect opportunity to launch a few political fireworks ahead of the election race really getting underway.
Speculation is always rife ahead of any budget announcement, but the 2015 Budget has added significance with the May election only weeks away. Mr Osborne will be keen to ensure that he makes this budget (in what may well be his final act as Chancellor) one that will appease workers and, with any luck, win over a number of recession-weary voters.
Top of the budget agenda is the Chancellor’s pledge to ease the strain on public spending cuts. With the economy on the up, and showing no signs of slowing down in the foreseeable future, the Treasury finds itself in a positive position; economic analysts predict that a £16 billion increase in public spending could be on the cards and may well be announced next Wednesday. This is, of course, great news for contractors. An increase in public spending will, by default, equate to greater demand for workers to fill the newly created job roles.
Following the Autumn Statement in 2014, various business groups and trade bodies have made suggestions to the government in support of the ever-growing flexible workforce. The Federation of Small Businesses has voiced the need for measures to support tax simplification, with the IPSE (Association of Independent Professionals and the Self Employed), calling for changes to the tax treatment of training. If granted, both requests could reflect positively on contractors and freelancers alike.
A key issue to listen out for in next week’s budget is the announcement of changes regarding travel and subsistence regulations. Last year we saw recruitment agency Reed go to tribunal, which resulted in them being liable for £158 million of unpaid tax subsistence and travel claims.
Further investigations have been made into the regulations surrounding the matter. This review of employee benefits and expenses stated that travel and subsistence should be limited to a maximum of 30% of a worker’s earnings and must be assessed on a rolling 12-month basis. Anyone falling short of this would no longer be regarded as a temporary worker and would not be able to claim any travel or subsistence expenses. So far, there has been little indication of what the Chancellor will announce regarding this matter in the upcoming budget.
We will all benefit from the increased income tax threshold from £10,000 to £10,600 being introduced in April 2015. George Osborne has voiced potential plans to raise this further to £11,000 by the end of the next Parliament’s term in office. This move would increase a contractor’s take home pay by as much as £200 a year.
If the Chancellor was to also increase the personal tax allowance to £12,000, this may cost the economy £2.7 billion a year to impose, resulting in some 24.4 million people paying less tax, while a further 430,000 will pay no tax at all.
So, what can contractors expect on Wednesday 18th March? More of the same or a few hidden gems to sweeten the election palate? Be sure to check your inbox on Thursday 19th March, when we will provide you with a full breakdown of the 2015 Budget.