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What Does The Spring Statement Mean For You?

The Chancellor’s Spring Statement had little specifically aimed at the contracting sector or self-employed people, which is positive given the last few years of IR35 and off-payroll legislation reforms amongst others.

However the fuel duty cuts will not go far enough for all the gig and platform economy workers, and other self-employed people who spend a lot of time on the road travelling to/from clients.  Gig workers in particular are living precariously enough as it is, earning a pittance and at risk of not being given any work with no notice.  Stratospheric fuel price rises mean that this important part of our economy can no longer afford to work, and sadly this cut simply doesn’t cut it.

The Chancellor’s decision to increase the employment allowance (which allows eligible employers to reduce their annual NICs bill) from £4k to £5k will not only benefit those genuine employers that need it, but also mini-umbrella companies too.  That’s because the premise of mini-umbrella companies is to operate umbrellas through lots of small limited companies purely so that they can benefit from the reduced NICs, the saving being generated is used as profit which enables them to undercut their compliant competitors.

Sticking with the umbrella theme, don’t forget that the previously announced NICs increases of 1.25% each for employers and employees comes into effect in April 2022.  This could mean a potential double-whammy of 2.5% reduction for umbrella employees if their assignment rate is not increased to take account of employers NICs increasing.

Rishi Sunak increased the annual National Insurance Primary Threshold and Lower Profits Limit from £9,880 to £12,570, from July 2022 which is hoped to save the average employee £330 annually.  The Chancellor also set out plans to cut the basic rate of income tax from 20p to 19p from 2024, the first cut to the basic rate in 16 years.

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