PCG: Budget 2014 was one to support contractors

Thursday 20 March 2014

Budget 2014 was a good one for contractors and limited companies, according to the PCG.

Commenting after chancellor George Osborne delivered his statement yesterday (March 19th), the body claimed the self-employed can enjoy a Budget that 'backs British business'.

Key changes for contractors included access to childcare for the self-employed, a cut in fuel duty and an increase in personal allowances.

Simon McVicker, director of policy and public affairs at PCG, said: "The chancellor opened his speech by saying that this Budget is designed to build a ‘resilient economy’. Independent professionals offer the flexible access to specialist skills which businesses need in order to grow while mitigating risk.

"They are a vital component in any truly resilient business landscape. It is therefore very encouraging to see the government start to consider those in business on their own account. For example, the extension of the childcare scheme to the self-employed is a positive step forward, particularly for female freelancers."

The introduction of a fuel duty freeze means it will also be cheaper for contractors to travel to jobs, meaning the best freelancers will be able to afford to work further afield.

What's more, the government has raised personal allowances to £10,500. The PCG claims this will be welcomed by the entire labour market, including the self-employed. In order to keep the programme among the best in the world, the government has also planned to consult on whether and how the allowance could be restricted to UK residents and those living overseas who have strong economic connections to Britain.

However, it's not all good news and the government has decided to move forward with onshore intermediaries legislation.

The PCG claims that while it's important to close the net on tax avoiders, officials have to tread a fine line.

"The Chancellor is right to clamp down on tax evasion but the government, in its commitment to tackle this problem, must be very careful not to target legitimate independent professionals who are driving growth in the economy," Mr McVicker said.

During the summer the government will also consult on the Construction Industry Scheme in a bid to improve the way it operates for small businesses. Mandatory online filing for contractors will be introduced as part of the changes, while discussions will be held with the industry to revise reporting obligations and improve registration for joint ventures.

The failure of the government to revise the onshore intermediaries legislation will come as a bit of a blow in an otherwise strong budget.

Prior to Mr Osborne's statement, the Recruitment and Employment Confederation (REC) and the PCG wrote the chancellor warning that the changes could harm the flexibility of the labour market.

They claimed employers would see costs rise by as much as 25 per cent when trying to use contractors or limited company contractors.

The experts had hoped the government would give businesses more time to renegotiate contracts and adjust project budgets in light of the legislation.

REC chief executive Kevin Green claims the swift introduction of the changes shows a lack of understanding of how businesses work and how complex contracts can be for long-term projects.

By Victoria McDonnell

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