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24th June 2010
Contractors could benefit from income tax change
Contract and freelance workers could be among those that benefit from the change in income tax regulations.
In his emergency budget this week, Chancellor George Osborne announced that the income tax threshold will be raised to £7,475 as from next year.
The Recruitment and Employment Confederation (REC) said this could prove to be a welcome development for contractors.
Kevin Green, the chief executive of the REC, said such workers could actually see financial benefit, given that they work short-term by definition.
"The rise in the income tax threshold means that they will leave the agency at the end of the week with more money in their back pocket," he explained.
However, the government also announced plans to increase VAT from its current rate of 17.5 per cent to 20 per cent in 2011, which may increase contractors' expenses.
Contractor Calculator commented: "Although VAT-registered contractors won't feel the impact of the rate rise on their business costs, consumer goods will become more expensive and that could potentially have a negative impact on the economy as a whole."
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