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Potential impact of the Summer Budget

Tomorrow will be the first time George Osborne has had the chance to deliver a Budget for a majority Conservative government, and there is plenty of speculation about what it might contain. Whilst nobody can be absolutely sure what the Chancellor is planning for his second Budget of the year, experts have some predictions as […]

By Laura Nixon on 07 Jul 2015
Read time: 3 minutes

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Tomorrow will be the first time George Osborne has had the chance to deliver a Budget for a majority Conservative government, and there is plenty of speculation about what it might contain. Whilst nobody can be absolutely sure what the Chancellor is planning for his second Budget of the year, experts have some predictions as to what is likely to be included.In George Osborne’s previous Budgets, any plans he had needed to be signed off by what was known as ‘the Quad’ which included himself, David Cameron, Nick Clegg and Danny Alexander. Tomorrow’s Budget will be based purely on Conservative values which will not have been tempered by the more left-leaning partners in government.

Contractors who are concerned about what the Conservative government might mean for them will probably have been focussed on the economy, especially given that this was one of the major issues on which the Tories fought the election. Their five point plan was to build a stronger and healthier economy which included a number of pledges which were considered contractor-friendly, such as cutting income tax and fuel duty, stabilising mortgage rates and reducing the economy.

Commentators believe that these pledges will form the basis of the ‘emergency’ Budget, but there are also concerns that some of their more dramatic pledges would be funded through cuts in areas which would affect independent professionals disproportionately. One of these was the tax breaks associated with pension planning, with most of the political parties identifying that as an area in which savings could be made that would fund their spending.

Any changes to the annual or the lifetime allowance, or even the much-feared removal of pensions tax relief all together could have a disastrous impact on contractors, many of whom rely on such tax relief for most or even all of their tax planning. Many people believe that this is an unlikely move, give the Chancellor’s enthusiasm for increasing interest in pensions amongst the populace, but until the Budget is announced, there will be concerns over this area.

There are also high hopes for the Budget to include details of the Tories’ plans to improve the lot of small businesses with the expectation of a number of measures designed to improve support for entrepreneurs and help one-man-bands on their path to success.

For many people, the ongoing ‘war’ on tax avoidance will be one of the biggest issues, with the government promising to stamp out what they are calling ‘aggressive’ tax planning. Concerns about how contractors working through umbrella companies could be penalised under these measures will be foremost in the minds of contractors all around the country, so the Chancellor will have to tread carefully to avoid alienating an entire workforce.

If you work for yourself, or are considering taking the plunge, then knowing your way around the contracting financial landscape is incredibly important. Having an expert in contractor accountancy to advise and support you is the best way to ensure that you aren’t paying too much or too little tax, so call our friendly team today on 01253 362062 or email us at contractoradvice@nixonwilliams.com for more information on our services.

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