04 Mar The Budget – Contractor perspective
As you may be aware, Chancellor Rishi Sunak delivered his budget for the upcoming year on the 3rd of March 2021. As a contractor you may be affected by some of the news released by the Chancellor.
- The UK economy shrunk by 10% last year as a result of the pandemic.
- 700,000 people lost their jobs as a result of COVID-19.
- There will be no change in the personal allowance from April 2021 until April 2026. The personal allowance will be frozen at £12,570 meaning you will not pay tax on the first £12,570 of your income.
- Likewise the higher tax bracket (or 40% tax bracket) will also be frozen from now until 2026, this will remain at £50,270.
- There will be no changes to the rates of income tax or National Insurance contributions.
- Those hoping for a last-minute reprieve to the off-payroll reforms will be disappointed, as HMRC confirms the IR35 changes will go ahead as planned from 6th of April 2021.
- It has been confirmed in new Government technical guidance, that umbrella companies are out of scope of the IR35 reforms i.e. umbrella company contractors are not affected.