Their most recent addition is the podcast. HMRC have recorded a series of podcasts and the latest one is aimed at businesses and citizens throughout the UK including contractors and sole traders.

The ‘Super’ podcast as it has been named, features guidance from HMRC experts including Stephen Banyard and also Don Macarthur. It covers important topics such as; the need for all employers to file their Employer Annual Returns online from this spring; new penalties for late payment of PAYE being introduced in May; and key changes to corporation tax filing and payment coming in next year.

Stephen Banyard, director of HMRC’s Business Customer Unit, said: “Our Super Podcast is a great way for businesses to remind themselves about some of the major changes on the horizon affecting VAT, PAYE and corporation tax. So whether you’re a VAT-registered trader, employer or limited company, we’d urge you to take 15 minutes to download and listen to it, to help ensure you’re prepared for the changes.”

The HMRC Super Podcast can be downloaded from HMRC’s podcast pages at http://www.hmrc.gov.uk/podcasts

ICS Accounting Ltd specialises in providing individual accountancy, tax advice and administrative services to professional contractors.

Below we have highlighted how specific measures will affect contractors. If you have any questions or would like more information about how our services for contractors can help you please contact us on 0800 195 3750. 

Corporation Tax

In his final Budget, in 2007, Gordon Brown had announced that the small firms’ rate of corporation tax would rise in three increments to 22%, the final increase being due in 2009. As many contractors who work through their own limited companies will be pleased to hear the planned increase in Corporation Tax has been deferred again until 2011, and the small firms’ rate will remain at 21% until then. 

 Income Tax and NICS

The new top rate of 50p on all earnings over £150,000 will come into force in April 2010, and 42.5% on dividends. The starting point for employers’, employees’ and self-employed NICS will be maintained at £110 per week. The upper earnings and profits for Class 1 and Class 4 NICS will be kept at their current levels of £844 per week, for the self-employed, the rate of Class 2 contributions will continue to be £2.40 a week. Class 3 contributions will also remain at their current rate of £12.05. 

 A further 0.5% increase on all National Insurance contributions by those earning over £20,000 was announced. Therefore many National Insurance Contributions will go up by 1% from April 2011, but by only 0.5% for incomes under £20,000. For freelancers within the scope of IR35 – if it is still in force at this time – this will be a double whammy, as IR35 obliges them to pay both employers’ and employees’ NIC.

  VAT

VAT will return to 17.5%, effective from 1st January 2010. This ends the 15% VAT “holiday”. 

Self-Employment in the Construction Industry

Following on from the blanket proposal to deem construction workers as employees unless some very restrictive tests were met, the Government announced that they would be publishing a summary of consultations in the New Year. No other commitments have been made.  

 Infrastructure

The Government announced a series of infrastructure projects and stressed its commitment to improving markets frameworks along with best practice in management and procurement. 

 The oil and gas sector is one of the focal points. In particular, changes to the criteria for the Ultra High Pressure, High Temperature field allowance have been announced. These changes, it is believed, could support the recovery of up to 300 million additional barrels of oil and gas from the North Sea. The Government is currently considering developing an infrastructure in the largely underdeveloped area of west of Shetland and the case for any fiscal support. This may represent very positive news for oil and gas freelance contractors.

 Overall, the industry seems to agree that this has been a neutral Pre-Budget Report for contractors, with only the very highest earners likely to be drastically affected. 

The changes mean small businesses including contractors and freelancers need to file all tax returns online after the end of March 2011, for accounting periods ending after 31 March 2010. From April, 2011, all Corporation Tax returns must be filed online in XML and the accounts in a specified data format (known as Inline XBRL or iXBRL). In a bid to help firms familiarise themselves with the new portal which will be used to file the tax returns, HMRC are hoping to release Corporation Tax Software by the end of the year.

A leaflet detailing these changes is being sent to half a million companies and tax agents. Companies will be able to file online either through commercially available software or by using HMRC’s own Corporation Tax filing software, which is aimed at companies with less complex tax affairs. Director of HMRC’s Carter Programme Mark Holden remarked: “We’re working closely with software developers, and a number of commercial products will be available to support the iExtensible Business Reporting Language standard from November 2009, with more to follow.”

As the leaflet explains, there is no need for companies to re-engineer their accounting processes to comply with the requirement to file online using iXBRL, as either HMRC’s Corporation Tax filing software or their commercial software will do this for them.

Many thanks to Alison@Keytime who also added that from 2011, there will be a joint filing initiative between Companies House and HMRC.

If you would like support running your own limited company call ICS free on 0800 195 3750.