Clauses dropped but not off-payroll rules
Following discussions with the Opposition, the government are to remove a majority of the Finance Bill clauses and schedules but, unfortunately, the wretched off-payroll rules is not one of those.
At 762 pages, the current Finance Bill is the longest on record and would have taken up to two days of House of Commons debate, 14-20 standing committee sessions, two days of report stage and a third reading debate. As a consequence of the surprise snap election being announced for 8th June, however, the timetable for Finance Bill 2017 reporting is shortened and it is likely that the committee and reports stage would have been condensed into a single day. It therefore makes sense for the government to remove the more controversial and complex provisions so that Parliament can examine these once it resumes after the election, and retain only those clauses essential to maintaining the raising of revenue which include:
- Income tax charges and rates for 2017/18
- Corporation tax charge for 2017/18
- Off-payroll rules
- Optional remuneration arrangements
- Disguised remuneration – employment income provided through third parties
- Insurance Premium Tax standard rate
- Promoters of tax avoidance schemes – threshold conditions etc
Some of those clauses temporarily dropped include those on Making Tax Digital, dividend nil rate for 2018/19, corporate loss relief and interest deductibility, and penalties for enablers of defeated tax avoidance schemes.
Whilst Making Tax Digital is unlikely to be a headline issue during the election campaign it will be interesting to see if any of the parties make political store out of it. For instance, Jeremy Corbyn has confirmed that, if elected, Labour would exempt businesses below the VAT threshold (currently £85,000) from digital record-keeping and quarterly reporting. Furthermore, opposition parties could force the government to abandon Making Tax Digital enabling clauses in the run up to Parliament being dissolved on 3rd May.
The likelihood is that either all or at least the majority of those provisions removed will return in a Bill after the election but unless something radical happens, the off-payroll rules will not be up for debate.
This further demonstrates the obsessive determination of successive Governments to punish those who work in a non-traditional way. Give us a break for god’s sake!
Well, there are a lot of contracting I.T professionals who are now advancing in years who still have a lot to offer, especially in niche areas. Speaking for myself, if the taxes become too punitive, such that I am continuously working year-on-year for less , then I suppose I shall retire and then the government won’t have anything from me. There are quite a lot of like-minded people in the the I.T industry that I am in contact with… their view is the same.. What should be alarming to the government is that in the aftermath of the “great offshoring craze” that companies have embraced over the years, we in the U.K. may not see this I.T. “talent” replaced and therefore have to use foreign suppliers to meet business requirements, wihout the goodwill & personal relationships that local professionals bring to the table . To say the least – this is not a good position to be in!
The Times also reports today that the MTD 4 returns a year clause has been dropped for now.
The NHS locums battle re off payroll working is interesting to follow. I do hope IT contractors will avoid working for HMRC on the MTD changes needed for the same reasons.
And here is the irony of all this, I have just been contacted by an agency for a contract with a government agency, and when I said that I wasn’t interested because of the Off Payroll legislation, the agent asked if I would be interested if they could secure an enhanced day rate that would ensure my take-home pay was at parity with what it would be if I was outside IR35! So now government agencies are having to inflate rates to secure the required skills, costing the government more than they will be getting back in tax. What is the point of this ridiculous legislation!
And here is the irony of all this, I have just been contacted by an agency for a contract with a government agency, and when I said that I wasn’t interested because of the Off Payroll legislation, the agent asked if I would be interested if they could secure an enhanced day rate that would ensure my take-home pay was at parity with what it would be if I was outside IR35! So now government agencies are having to inflate rates to secure the required skills, costing the government more than they will be getting back in tax. What is the point of this ridiculous legislation!
So now the Public Sector are having to secure decent people through contracting routes with the large consulting firms and paying three times the price for the same or lesser skills. That’s really working well for the taxpayer!
It seems HMG is only interested in the headlines. Quite happy to sit back and say their policies are working but peek behind the curtain and you see how barmy they are. Take the case of a woman denied the £6000 for her motability car to go to work in and then deemed eligible for £65000 of assistance with taxi fares to replace it.
I’m approaching 63, worked in IT for 42 years and freelance for the last 24 of them. Every day I ask myself is it worth working any more with extra dividend taxes, rates getting poorer, HMRC breathing down your neck, etc.
Why do contractors, especially IT contractors, despise paying for what nearly all working people pay for, namely a decent health service, fire and rescue services and all the other things that taxes go towards.