How the press reacted to the April tax changes

8th April, 2016
By 8. April 2016News
How the press reacted to the April tax changes

Although the new tax changes to dividends and travel expenses have been seen by self-employed contractors as a bad thing, not everyone was unhappy to see the April tax change come into effect.

Reaction to recent press coverage has varied depending on whether those losing out are only marginally affected to those whose income relies heavily on dividends.

To recap, since April 6 dividends are being taxed at 7.5 percent at the basic rate, 32.5 percent at higher rate and 38.1 percent at the additional rate, with the first £5,000 of dividends tax free.

This will mean that most contractors and self-employed freelancers whose fees are channelled through a limited company will face a greater tax liability and may want to take advice on how they can counteract this – ContractingWISE can point you in the right direction of professionals who can help.

The rules on travel and subsistence expenses are also being tightened up so that it will become much harder to claim home-to-work expenses for anyone working via an umbrella company or who can be caught by IR35.

April tax changes reactions

The Daily Mail ran a lengthy breakdown of the April changes – but for the newspaper this was a chance to ‘cash in’ by earning up to £17,000 tax free. Among the celebrations, it was noted in passing that those who are self-employed or have ‘complicated tax affairs’ might have to fill in a tax return, although the practical effects of the changes were ignored.

The Times carried a short report with suggestions that “the new rules will mean many hard-working company owners will lose thousands of pounds in income”. Clive Lewis of the Institute of Chartered Accountants in England and Wales, told the paper that forming a limited company would become tax efficient beyond £30,000 a year.

The Daily Telegraph reflected some of the disappointment small business owners are feeling about the tax changes. Their coverage highlighted the attack on small business and those that invest in new business start-ups, particularly in the technology sector.

Guardian columnist Jeremy Bullmore stood up for contractors in response to a letter from a reader who asked if it was ‘immoral’ for his partner to set up a limited company to reduce her tax bill.

“You are not so much being unfair as being unreasonable,” Bullmore replied. “I find it slightly objectionable that you should make your partner feel guilty about her perfectly legitimate arrangement and presumably expect her to carry the cost of your scruples.”

Meanwhile, Cabinet Office minister Matthew Hancock spoke to the Mail on Sunday about plans for self-employed contractors. The paper reported there are ‘growing concerns’ over plans for HMRC to make small businesses – including landlords, freelancers, and contractors – file online tax returns each quarter. The minister, however, is in favour.

“Ultimately it’s good for business and it’s good for the taxpayer,” Hancock said. Non-VAT registered companies will start the new regime in April 2018, while every other business will follow suit by 2020.

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