Budget 2018 – what does it mean for freelancers and self-employed?

Tax buttons on calculatorI’m writing this just as the Chancellor sits down from delivering his 2018 budget. It was heavy going, mainly because his jokes were so awful.

What he covered in the speech is only the tip of the iceberg. More detail will drip out as we trawl through the big Budget Red Book.

What I can give you here is a quick run-down of bits that might affect freelancers and self-employed folk, as he mentioned them in the House. 

  • IR35 – This is the legislation which stops people being taxed as self-employed when they’re working in a way that looks like employment.IR35 image

In April 2018 the government changed legislation around this,  but only for people getting work in the public sector. This included the BBC.

It’s been rumoured all year that the Chancellor would extend this to the private sector. Today he announced that he would, but with two caveats:

1/ The introduction to the private sector will be delayed until April 2020.
2/ It will “only apply to large and medium-sized businesses”.

The devil will be in the detail. For example, what is a medium-sized business? [Update: Most people are assuming HMRC will follow the generally accepted  definitions of business sizes, which you can find on Gov.uk.]

This could be important for freelancers who operate as Limited Companies working for production Indies.

In the last year some production people have found their take-home pay has gone down significantly because of IR35.

  • New Enterprise Allowance (NEA) – this is the equivalent of jobseekers allowance for people who are not looking for a job, but who want to set up a self-employed business.

The Chancellor says the NEA will be extended. I’ll let you know the detail when I have it. Meanwhile here’s more about the NEA.

  • VAT – There have been rumours for a year about changes which could affect self-employed freelancers and other small businesses. (See my earlier post.)VAT return

It’s still most likely that the point at which a business (including a sole trader) has to become VAT registered will be reduced. But the Chancellor says nothing will happen until 2020. [Update: the Red Book says the registration threshold will be held at £85,000 turnover until 2022.]

As the European VAT area is a part of the Brexit talks, it’s not really a surprise that this has been kicked two years down the line.

  • Personal taxes – no doubt you’ve already spotted that the planned changes in income tax thresholds are being brought in a year early.

From April 2019 the personal allowance will be £12,500 (up from £11,850 for 2018-19) . The higher rate tax threshold (except in Scotland) will be £50,000 (up from £46,350).

There was no mention of Corporation Tax. And twice the Chancellor mentioned there was more detail in the Budget Red Book. I suppose that means I’d better read it. *sigh*

So watch this space.


Posted on 29 October 2018

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