25th March 2010

Contractors in business

Folowing the 2010 Budget, limited company contractors will see few changes in the coming financial year, as the corporation tax rise is deferred by another year. The planned increase in National Insurance Contributions (NICs) is still set to go ahead in 2011, penalising those contractors with limited companies that employ the contractor and others, such as a spouse.

The Budget highlights for limited company contractors are:

•    No increase in corporation tax
•    No increase in Capital Gains Tax (CGT)
•    Increases in capital allowances to encourage investment
•    Entrepreneurs’ Relief allowances doubled to £2m, a benefit to ‘contracterpreneurs’
•    No business rates for one year for an estimated 340,000 small and medium enterprises (SMEs), including contractors with their own business premises
•    Time to pay scheme extended for firms with cashflow issues, allowing them to delay payment
•    A new investment corporation – UK Finance for Growth – will provide businesses with capital
•    A pledge is made to make available 15% of central government contracts to SMEs and pay 80% of invoices within five days.

There are tax breaks for the oil and gas sector, designed to increase exploitation of these natural resources in remote North Sea oil and gas fields. Contractors working in some sectors will benefit indirectly, as a new £2bn fund has been made available for ‘green investments’, focusing on the offshore-wind sector first.

But despite Alistair Darling’s claim that the government does “Recognise the role government can play in providing a launchpad for businesses to succeed”, in the 2010 Budget there were no specific measures to encourage knowledge workers or the flexible workforce.

Source: Contractor Calculator