The speculation will soon be at an end: Chancellor George Osborne will unveil his fiscal plans for the next twelve months in the 2012 Budget today. Contractors working through umbrella companies or limited companies will be keen to discover whether or not they will emerge unscathed from his continued infatuation with austerity.
The writing on the wall is that Mr Osborne will do little to alter existing rates of National Insurance Contributions and income tax, although more people will fall inside the 40p tax band after 6th April this year, when it drops to £34,371 (only two years ago, it stood at £37,401).
Some pundits are predicting that the 50p tax band will be cut to 45p, a move which could well bring charges that the Chancellor is helping the most well off at the expense of lower income households.
Companies generating profits in excess of £1.5 million will see a cut of 1p in the main rate of corporation tax and there are suggestions that he may act more boldly, chopping the main rate down to the 20p small profits rate familiar to many contractors.
If against all the odds you are still expecting the abolition of IR35, you are almost certainly going to be disappointed. Don’t anticipate any substantive changes to IR35 rules themselves but (thanks to the work of the IR35 Forum) do expect some key changes to the way HMRC administers them. Also widely predicted is the announcement of a General Anti-Avoidance Rule (GAAR).
Given the blatant unfairness of the original proposals, it is going to be interesting to see how Mr Osborne intends to reform the current system of child benefits.