Budget to target self-employed

Budget to target self-employed

Self-employed people could see their future tax bills rise following announcements expected in next week’s Budget, warns Jon Miles, director of Richardson Swift.

“Changes to self-employed taxation are expected to be mentioned in the Budget on Wednesday and are likely to result in a consultation. The Chancellor may also reveal some immediate changes to self-employment rules.

“We understand this is driven by the Treasury's desire to tackle a disparity between the tax treatment of self-employed workers, those paid through PAYE, and those operating through personal service companies.

“With the other significant changes ahead relating to Making Tax Digital, we hope that this is not rushed through and that any consultation is administered properly.

“Consideration needs to be given to those who are genuinely self-employed and there is potential impact on the labour market for the many businesses in areas such as Bath, which rely on self-employed contractors.”

Other potential changes

“Following recent promises not to raise income tax, and rising petrol and insurance costs, the Chancellor might look closely at restricting pension tax relief further for “higher earners” to fund mounting spending pressures in areas such as social care.

“Whilst there is already a restriction for the very top earners, we would hope that the definition of "high earners" is carefully considered, and does not adversely impact owner-managers in Bath and the surrounding areas who run growing businesses.

“Whilst pension funds do provide attractive tax and National Insurance benefits, they can also play an important part in funding a business and helping it to grow.

“Along similar lines to the recent lobbying by the Institute of Directors, a 'white-list' of "authentic" and "permissible" tax planning would be desirable.

“As the definitions of acceptable tax planning and aggressive tax avoidance have become more and more blurred, such a list might encourage the making of genuine investment decisions and transactions, while removing unnecessary or "perceived" tax risks.”