Contractor UK believes ‘contractors should emerge relatively unscathed from the chancellor’s Budget on Wednesday, feeling as if they are neither winners nor losers’ but Contractor Calculator adds that those ‘expecting a pre-election giveaway Budget on Wednesday are likely to be disappointed’.

It is thought that no further anti-contractor initiatives are likely to be introduced or amended. “Announcements of major changes to the taxation of family businesses are not likely at such a politically sensitive time”, PKF said. Therefore, “it is expected that rules to block ‘income splitting’ will remain on hold”.

Leading advisors to freelance and contract professionals are due to comment tomorrow, (Tuesday 23^rd March) on what they expect to see in Wednesday’s budget and Independent Contractor Services will update the news page with their forecasts.

 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.

Among the words whose commercial use will now require permission, in order to stop businesses feigning some type of authority, are ‘adjudicator,’ ‘bank,’ ‘chamber of’ and ‘tribunal.’

Before any name on the restrictive list can be used, permission will need to be sought from Companies House the legislation states.

The organisation said in its guidance: “If you choose a name that includes any of these words you will need to write to the relevant body to ask whether they have any objection to the proposed name.”

Contractor UK recently reported that there are more than 70 words that remain from a previous list of names or expressions which are restricted, meaning permission must be sought before use, or that are banned outright.

Decades-old regulations on using company names “that are so misleading that they would be likely to cause harm to the public”, such as the 42 new entries on the list, were refreshed on October 1st.

As a contractor, a limited company is often considered the most prudent option if you are outside of IR35 (although it can also be an option if you are within IR35), as in many cases you will take home a greater proportion of your income than through an umbrella company.

Almost any firm of local accountants can help you to set-up a limited company for a fee, but they will almost certainly not have the specialist knowledge required to ensure you are compliant with specific contractor legislation such as IR35 and MSC.

For more information about the Limited Company Service we offer here at ICS, you can download a guide here.