Although there was no promise to repeal IR35 as some had hoped for, equally there was no threat to reintroduce ‘income shifting’, as some had feared.  Shout 99 also added that there was no recognition of the role the contracting sector can play in the economic recovery, but equally, there were no further measures targeted at what the Government likes to call ‘false self-employment’.

The PCG called the PBR a political event which did nothing to help the UK’s nano-businesses and self-employed community. They said that it was apparent that the Chancellor had put off the difficult decisions until after the next General Election.

John Brazier, MD of the PCG said:

“There was a lot of talk by the Chancellor today about fairness, however this PBR has failed the fairness test for the UK’s 1.4m knowledge based freelancers. IR35 was not abolished, National Insurance Contributions are to go up in 2011, by double what he previously said and the only crumb of comfort is that the small business corporation tax rate rise is to be deferred. The borrowing figures are huge and the public expenditure cuts in years to come are bound to be savage, affecting all sectors of the economy and ordinary people.”

It has been good news for limited company contractors, with Alistair Darling announcing that the proposed 1p rise in corporation tax is to be deferred. The announcement on increasing National Insurance Contributions is going to affect everyone. Some contractors and freelancers may decide they want to incorporate rather than be part of an umbrella company, as this may make savings for them in the future. Only the very highest earning contractors are likely to be significantly affected, with the top rate of tax for people earning more than £150,000 rising to 50% as of April next year.

Overall, the industry seems to agree that this has been a very middle-of-the-road pre-Budget report where contractors are concerned, with only the very highest earning contractors likely to be drastically affected.

Mr. Darling will be expected to chart out the road to economic recovery and give more details of how he plans to halve the public debt over four years.  All parties have admitted that spending cuts will be needed to achieve this but the Conservatives want them to begin now.

The pre-Budget report will be the last before a general election, which must take place by June 2010.

Earlier this week, the PCG, a voice for all contractors and freelancers, announced that they had issued a three-part wish-list to Alistair Darling, the chancellor, ahead of his Pre-Budget Report..

BBC News reported that Mr. Darling will be under pressure to update his economic forecasts after figures published last month showed the UK was still in recession – contrary to the predictions of many economists.

Bytestart, the small business portal and the PCG will update their website with all the latest developments and predictions that may affect contractors and freelancers in the lead up to the Pre-Budget Report on 9th December.

The wish-list included the requests to; Scrap IR35, drop ‘income-shifting’ rules, and provide freelancers a less restrictive business model.

The Professional Contractors Group (PCG) said that freelancers, by their very nature, had become one of the first victims of the recession. The number of freelancers in work had fallen by 12% in the past year, according to a member poll.

“We know from past statements by ministers that IR35 is not known to be a revenue-raising measure”, Mr Bryce wrote. “It is not at all clear that such monies as it raises in extra tax offset the considerable expenditure by HM Revenue and Customs in pursuing the many fruitless enquiries known to us.”

He added that the legislation creates massive and crippling uncertainty for freelancers, as they are unable to self-assess their tax liability under it with any confidence.

The current consensus is that Mr Darling’s Pre-Budget Report will be delivered on November 25th, although the last possible date it could take place is December 2nd.

If you are struggling with all the accountancy options available to you as a contractor, Independent Contractor Services (ICS) can explain them and help you decide which is the best option for you, whether you work within or outside of the IR35 legislation.