With tomorrow’s election threatening to be the closest and most unpredictable vote for a generation, the result could have serious implications for umbrella company employees.
Our managing director, Derek Kelly, told news site Contractor UK that contractors will be waiting with baited breath to see how possible changes to income tax, VAT and business expenses will affect them.
When it comes to Income Tax, Derek pointed out that Conservative plans to raise the 40p threshold to £50,000 would be more appealing to professional contractors. The party has also promised to freeze PAYE and National Insurance until 2020.
UKIP’s commitments to create a new ‘intermediate’ rate of tax were described as “eye-catching”, as was its promise to raise the 40p threshold to £55,000. Derek does however acknowledge that Farage’s “People’s Army” has the luxury of knowing it wouldn’t be held accountable for any pre-election promises.
Derek claimed that changes to Corporation Tax could either help or hinder contractors’ chances of securing an assignment. Lib Dem plans to levy a ‘supplementary’ charge on banks would have a serious knock-on effect on clients within the financial services sector.
On the flip side, contractors will be hoping that the dramatic drop in Corporation Tax witnessed over the last five years will continue. This is because a lower rate would benefit the umbrella companies that employ them, the recruitment firms that help them secure assignments, and the businesses that benefit from their expertise.
Unfortunately, this dream has already been kiboshed by Labour and the Greens. Ed Miliband vowed to increase the levy to 21%, while Natalie Bennett promised to go further and introduce a rate of 30%.
Meanwhile, contractors will be anxious to find out whether Labour’s apparent anti-umbrella rhetoric will be translated into policy changes should Mr Miliband wrestle control from the Conservatives. Derek said he was “confident” that once presented with the full facts, the current Opposition would adopt a more sensible position.
Have your say
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