How Does The Autumn Statement Impact Freelancers & Contractors?

Google reviews
November 24, 2016
n

As the number of self-employed professionals in the UK swells to 4.79 million, many freelancers and contractors kept a close eye on Westminster for the Autumn Statement 2016. Proposed changes to IR35 and the new Making Tax Digital initiative were high on the agenda, but how did the government deliver against expectations?

To bring you up to speed on the Autumn Statement and what it means for freelancers and contractors, let’s take a look at some of the key points:

 

Public sector changes to IR35 confirmed

It’s no secret that the government is intent on curtailing the tax savings made by contractors. IR35 is a hot topic; contractors have been campaigning hard to highlight problems with the proposed changes to public sector off-payroll contracts.

Despite these efforts, the Autumn Statement confirmed that the government will push ahead with its plans. From April 2017, it will be the end client’s decision whether or not the contractor/company is inside or outside of IR35 stipulations. The move is likely to drive a lot of self-employed professionals away from working with public bodies.

VAT flat rate scheme increases

Another aspect of the government’s clampdown on taxation of the self-employed is changes to the VAT flat rate scheme. Labour-only businesses will now be subject to a 16.5% rate, reducing the financial savings made through VAT registration.

This will make flat rate schemes far less attractive for freelancers and contractors, meaning that many will avoid voluntary registration and choose the standard rate VAT scheme when they do hit the threshold.

Savings for the self-employed

However, it wasn’t all bad news in the Autumn Statement. The government stuck by its pledge to abolish Class 2 National Insurance contributions. This will save independent professionals £130 every year, coming into effect from April 2018.

Looking ahead to 2020, the future is also promising. On Wednesday, the Chancellor reaffirmed the commitment to reduce corporation tax to 17% by 2020, which is great news for directors of limited companies. Meanwhile, the tax-free allowance is set to reach £12,500 by 2020.

Delays to Making Tax Digital announcements

This year’s Autumn Statement was notably slimmed down, at less than half the size of the one presented in 2015. So there were a few key announcements that were skipped over by the Chancellor, including an update on the Making Tax Digital initiative.

As the consultation period has just come to an end, feedback was widely anticipated on Wednesday. However, the government has postponed announcements on MTD until January, meaning we’ll have to wait and see how digital tax accounts will play out.

So there you have it – a speedy roundup of some of the most important announcements (or lack of) affecting freelancers and contractors in the Autumn Statement. We’ll be keeping a close eye on how these developments pan out over the coming months.

Want to learn more about how they impact you? Give our specialist accountants a call on 0161 669 4221 or email info@biaccountancy.com to have a chat with our team.

Autumn Budget 2017

Resources

Recent Articles

New Pension Schemes Bill to benefit 20 million workers

New Pension Schemes Bill to benefit 20 million workers

The Government’s new Pension Schemes Bill is expected to make it easier for millions of people to manage their pensions, by improving returns, and combining smaller pension pots to create bigger and better pension funds. The benefits of combining smaller pension pots...

Record number of self-assessments sent in first week of tax year

Record number of self-assessments sent in first week of tax year

Just under 300,000 self-assessment tax returns were filed in the first week of the 2025/26 tax year, according to HMRC, way ahead of the deadline of January 31, 2026. A total of 299,419 tax returns were filed between April 6 and April 12 – 28,503 more than the same...

Changes to umbrella company payments could reduce wages

Changes to umbrella company payments could reduce wages

Umbrella companies are typically used by recruitment agencies to employ workers on temporary contracts, in sectors like IT, healthcare, construction and education. Usually, the contractor or temporary worker will work for a client, the client pays the recruitment...

Ready to join us?

Whether you’re a contractor, freelancer, or small business, Bright Ideas can help remove the burden of time-consuming and complex finances. We’ll draw on our years of knowledge and experience earned helping sole traders just like you.

When you choose us, you’ll be assigned a dedicated Account Manager who’ll provide one-on-one support that’s customised to your business. Communication is key, so we’ll always answer your questions or requests as soon as we can. In fact, we offer a same-day response guarantee for emails and calls received before 3pm.

Contact us to get started

Give us a call us or send an email today!

Looking to Switch Accountants?

Does your current accountant give 1-to-1 support? Are they fast and thorough?
Slap-dash services hold businesses back, so try our expert accountants instead. We make the transition simple, get in contact with us today and we’ll start the process.

Start the conversation

Let’s make your finances Brighter

Call us Monday to Friday 9am - 5pm

0161 669 4221

Request a call back