So, the Chancellor has spoken. With the fog still hovering over the battlefield, a few prominent contractor voices have come forward with some cautious praise. Freelancer group PCG described the emergency budget as ‘intelligent’, whilst Parasol, one of the UK’s most prominent umbrella companies, claimed it contained ‘a lot of positives’ for small businesses and contractors.
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PCG Managing Director, John Brazier, praised the Chancellor’s roadmap for corporation tax, which is set to be cut by 1% per year from 2011 until it reaches 24%, and changes to income tax over the course of the next Parliament, both of which he believes will benefit independent contractors significantly. Parasol Chief Executive, Rob Crossland, warmly endorsed the rise in income tax threshold (personal allowances will be raised by £1000 from 2011) and the £21 per week increase in employer National Insurance Contributions, which his company will pass directly on to its contractors so they’ll see a rise in their take home pay.
The reductions in Corporation Tax are also likely to make contracting via one’s own Ltd Company much more attractive – income is likely to rise as a result of these progressive falls, assisted in no small measure by the increase in VAT to 20%.
The one area of doubt remains the impact on contract jobs of the government’s cuts. But, if they lead to a freeze on public sector permanent staff recruitment, contractors may yet be the beneficiaries: if the economy grows sufficiently, contract workers are likely to be drafted in to complete critical projects. Today, Mr Osborne gets provisional -and slightly tremulous – thumbs up…. Click Here to give us your thoughts.
the bbc calculator says we will be better off with this budget (if income 10000 salary, 50000 dividends) and falling taxes for contractors will be a big help when continued employment is so uncertain, and work gaps very likely.