IT contractors to 'bear the brunt' of Chancellor's cuts
24th November 2015 | News
One-man band technology professionals are expected to suffer some of the heaviest financial cuts by Chancellor, George Osborne, who is set to launch a range of fresh cuts to tech and enterprise in his upcoming Autumn Statement.
Cash from the Government – up to £600m-a-year – will be switched from grants to a range of loans, according to the Daily Telegraph, with Mr Osborne reportedly rejecting appeals to hold or hike direct IT funding.
Last weekend, the digital sector voiced their concerns to the Chancellor, asking him to introduce a new £10,000 tax break for space-sharers; invest in super-fast broadband and tailor three existing tax reliefs to technology companies.
The cost of Entrepreneurs’ Relief is also reported to have ballooned in recent years, totalling £2.8bn in 2013-14 compared with just £360m in 2008-09. It would seem that this tax relief is ripe for the Chancellor’s axe.
The relief is particularly vulnerable this year in light of Mr Osborne’s pledge at the Summer Budget to tackle “tax imbalances”.
Tax commentators, such as lawyer, Jolyon Maugham, have blogged that Entrepreneurs’ Relief is no longer easy to justify.
“It’s not even clear what the purpose of the relief was in the first place,” said Maugham.
Merryn Somerset Webb, columnist for Money Week magazine, indicates contractors will be hit especially hard if Entrepreneurs’ Relief is reformed in the way that dividends were in July.
“Osborne has had a go at tightening things up but it has, nonetheless, been perfectly possible to work as a contractor or a freelancer, run all your earnings through a personal services company, take your income as dividends, and then to dissolve the company and claim entrepreneurs’ relief on the capital remaining within it,” said Somerset Webb.
The self-employed business community does not have too much longer to wait for the Chancellor’s decision on policies.
The Autumn Statement 2015 and the spending review will be unveiled tomorrow at the House of Commons. Stay tuned to our news feed tomorrow for the headlines affecting contractors, self-employed professionals and small businesses across the UK.
Image: The CBI