Budget comment: Reform of IR35 rules

by | Oct 29, 2018

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Autumn Budget 2017

Traceyann Kneen, head of technical at Nucleus:

“It’s no surprise that the Budget included further changes to IR35 off payroll working. IR35 legislation was designed to combat tax avoidance by workers supplying services to clients through a company. These workers would usually have been classed as an employee if the company weren’t used.

“These changes – coming in April 2020 –  will mean large and medium-sized businesses using personal service companies take responsibility to make sure that those contractors not on payroll adhere to IR35 in line with arrangements in the public sector which were reformed in April 2017. As pension contributions don’t fall foul of the “IR35 rules” they remain a very effective way of extracting profits from personal service companies. Advisers should remain alert as to planning opportunities.”

 

Income tax thresholds

“In perhaps the biggest headline from today’s Budget speech for the many, Hammond brought forward the Conservative pledge to raise the personal allowance and the higher rate tax threshold to £12,500 and £50,000 by 2020. This has been accelerated with its introduction from April 2019. It was confirmed this would take 1.7 million out of tax altogether and 1 million out of the higher rate tax threshold. Is this what was meant with austerity being over?”

 

 

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