The announcement of the UK budget will have a lot of impact especially to the both the employers and the contractors.
The budget has greatly considered the working parent. Parents will benefit from the new tax free vouchers that will offer £ 1,200 childcare to parents earning less than £150,000 per year, aimed at encouraging more parents to return to work after maternity or paternity leave. This will come as a boost to employers in the region.
The other set of good news to the contractors is that the 3% increase in fuel tax that was due in September has been scrapped and so has the escalating beer tax which will now be replaced by a cut of 1p per pint. Other alcohol duty rises remain in place though, such as 10 pence extra on a bottle of wine. Gin drinkers are the hardest hit and must pay 39p extra!
A focus on more sober matters, the chancellor steered clear of pension tax. This will come as a huge relief to contractors as pensions seem to have suffered in recent budgets, with annual allowance falling from £ 255,000 to £ 40,000 over the last three years of budget statements, while the lifetime allowance reducing from £ 1.8m to £ 1.25m. This has come in amid speculation that there could have been a further cut to £ 30,000 a year.
The government is also set to cap long term care at £ 72,000. This will put a limit on the proportion of an individual’s wealth that can be consumed to pay up for their later years, although this is all in theory. This will provide peace of mind to those who want to plan for their old age and leave savings to their children.
There has also been a major boost to investors as Osborne has scrapped duty on the shares traded in growth markets. This will allow contractors interested in self-investment to access far greater range of options.
It is also a major relief as the tax loop hole that allowed many companies to dodge around £ 100m in national insurance will now be closed. It is important that the government closes this loophole as soon as possible, ensuring that no worker is left unaware that their tax status makes them ineligible for such benefits. Every worker should be secure in the knowledge that the correct tax is being paid by their employer so that they are not exposed to unnecessary risks.
It is also good news to all employers as from April 2014; the government will give businesses and charities an entitlement to a £ 2,000 Employment Allowance per year towards their employer National Insurance contributions (NICs) bill. This will particularly help small businesses who want to hire their first employee or expand their workforce;
The government also intends to promote exports and inward investment by providing support for more than 32,000 SMEs to export in 2012-13 and also provide support to UK exporters to win contracts worth over £ 3.2bn. Also encourage investment across sectors and regions.
The UK government also sets out to make UK the best place for business by improving access to finance and support to new and growing businesses. This will be possible through Seed Enterprise Investment Scheme and expanded Venture Capital Trusts and Enterprise Investment Scheme, funding raised so far through the Business Finance Partnership and the increasing number of banks and building societies signed up to the Funding for Lending Scheme.
The article was written on behalf of a paye umbrella company for contractors who also provide accountancy services to limited companies.