We're all going to have to pay more tax, apparently.
There's been a lot of speculation in the press of late, as journalists try to help Chancellor Rishi plan his next budget and raise more in tax. This is something we commented on in April. Tax all freelancers with a CIS style deduction at source. We even sent a briefing note into the Treasury telling them how beneficial it would be, both in terms of increasing the sum of tax raised and creating a new stream of tax revenue collected "in real time."
But is there anyone in HM Treasury listening to businesses "on the ground" such as Hudson Contract? As the biggest single "engager" of freelance builders in the UK, we know the strength of the post-Covid lockdown return to work. We know what Covid has meant in terms of average earnings. And we know how effective the CIS scheme is when it comes to tax revenues.
When the Chancellor announced help for the self-employed, he hinted that a rise in NIC contributions would follow. When IR35 reforms were drafted, HM Treasury policy makers clearly had a target of increasing the tax-take in their sights. Whilst change it seems is coming, the way of these things seems to be to complicate tax laws further.
Yet it really is simple. CIS deduction at source is effective and accepted by the Construction Industry. The process gives almost £1billion real-time cashflow benefit to HM Treasury over collection in arrears and leaves the best part of £850m per annum in unclaimed allowances. Extend that type of scheme to all who freelance as sole traders and the cashflow and unclaimed personal allowances could increase four-fold.
Founder & Chairman, Hudson ContractMore from this expert
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