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Could Brown’s childcare voucher plans cost him?

Posted by Redego | Posted in Contractor, News | Posted on 11-11-2009

Tags: childcare vouchers, Contractor, Freelancer, Freelancing

Nine former ministers today rounded on Gordon Brown’s plans to cut childcare, warning the prime minister that he is threatening marginal Labour seats in the runup to the election by axing popular support for hard-working parents.

The warning came from normally loyal former ministers – including Patricia Hewitt, Estelle Morris, Hilary Armstrong, Beverley Hughes and Caroline Flint – who say the plans to cut childcare vouchers for more than 340,000 parents are “greatly unfair” and “mark the undoing of one of Labour’s landmark achievements”.

Brown announced he was removing tax relief for employer-based childcare vouchers, arguing that too much of the money was going to the middle classes. He has outlined plans to switch the money to provide 10 hours of free childcare for 250,000 two-year-olds by 2015. But removing vouchers, which are thought to save parents up to £2,400 a year on the cost of nurseries, nannies or childminders, would strip “effective and popular childcare support from hard-working parents”, the former ministers said.

In their letter to Downing Street, the former ministers, including former women’s minister Meg Munn, urge the government to review the decision: “Carefully considering the full impact of removing the tax relief on parents, employers and the childcare sector.”

“Surely this is not the time for us to remove a key support from hard-working families at the very point we need them at their most engaged and productive to fuel the recovery from recession. Crucially, in the runup to an election, it will remove support for working parents and for businesses in key marginal constituencies.”

More than 70,000 people have signed a petition on the Downing Street website criticising Brown’s decision and urging him to reconsider. Some of the signatories to the letter have likened the revolt to the way the government was caught on the hop over opposition to the abolition of the 10p tax band.

The authors, notably Hewitt, believe the Treasury has mistakenly seen the childcare voucher as a middle-class perk.

The letter said: “Childcare vouchers are an essential support to over 340,000 parents enabling more than 33,000 employers to help their employees, especially women, balance family and work responsibilities. It added: “Withdrawing them will penalise a significant number of lower-rate taxpayers, reduce the overall amount of funding available for childcare, reduce parental choice and impact negatively on the economy as the UK moves towards recovery.”

The vouchers can be used to offset the cost of childcare from Ofsted-registered providers, saving higher-rate taxpayers £1,195 and basic-rate taxpayers £962 a year. Both parents can use the vouchers, potentially saving couples £2,390 a year.

The government maintains that existing beneficiaries of the tax break will not lose out, and that the current scheme is badly targeted by providing too much relief to higher-rate taxpayers.

Downing Street said it would look at the criticisms carefully in advance of the pre-budget report. The critics said the government’s belief that the relief is regressive was based on out-of-date figures, and that the latest surveys suggested 74% of the users of the scheme are basic-rate taxpayers. Other signatories include the former Scotland Office minister David Cairns, former Europe minister Denis MacShane, and the former international development minister Sally Keeble.

Nine former ministers today rounded on Gordon Brown’s plans to cut childcare, warning the prime minister that he is threatening marginal Labour seats in the runup to the election by axing popular support for hard-working parents.

MP wants a blacklist of IT contractors

Posted by Redego | Posted in News | Posted on 05-11-2009

Tags: Contractor, Freelancer, Freelancing, PAYE, Tax, Umbrella Company

A blacklist of public sector IT contractors should be drawn up to identify those whose past pledges of value for money were just spin, a Labour MP is urging.

Over 50’s can invest £10,200 tax free!

Posted by Redego | Posted in Articles | Posted on 04-11-2009

Tags: Contractor, financial, PAYE, retirement, Tax

On 27th October a new ISA limit came into force for the over 50’s which allows you to invest up to £10,200 in a tax efficient ISA. In booming markets this gives baby boomers the chance to cash in before the new limit is rolled out to all investors in April 2010.

Taxman hits YouTube to root out offshore ‘fiddlers’

Posted by Redego | Posted in News | Posted on 02-11-2009

Tags: Contractor, Freelancer, Tax

The taxman is making his first appearance on YouTube today in an attempt to increase pressure on savers who have not declared their offshore accounts.

More than half of people do not have a will

Posted by Redego | Posted in News | Posted on 26-10-2009

Tags: Contractor, Freelancer, Freelancing, Tax

More than half of Britons have not made a will, meaning they have no say in who their assets will be passed to when they die, a survey suggests.

Tax inspectors to clamp down on people ‘before they break law’

Posted by Redego | Posted in News | Posted on 23-10-2009

Tags: Contractor, Freelancer, Freelancing, Tax

Tax inspectors have been given draconian powers to pursue people who have not broken current laws but may be in breach of future legislation which has yet to be drawn up by Parliament.

Redego clients unaffected by the death of the Self-Cert mortgage

Posted by Redego | Posted in News | Posted on 21-10-2009

Tags: Contractor, financial, mortgage

The FSA announced this week that they are likely to pull the plug on Self-Cert Mortgages

In a controversial announcement the financial services regulator revealed that they are looking to introduce compulsory verification of borrowers income which will effectively kill the self-cert mortgage market. This comes as no suprise following recent developments in the industry which has seen Nationwide, one of the last remaining lenders, pulling all of their self cert products from the market.

Contractors and the Self Employed seem to have been caught in the cross fire as the FSA has been keen to appear to be clamping down on the unruly banking sector. Just when the country needs Entrepenuers the most, the net result of the move could be to force them back in to permanent employment in order to obtain a mortgage.

As far as Redego clients are concerned, the death of the self-cert mortgage may come as alarming news but it is certainly not the end of your home ownership dreams. ContractorFinancials are specialist mortgage advisers who work on behalf of our clients and have negotiated contract based underwriting with lenders that can help ensure you can borrow the same, if not a higher amount, as when you were a permi. Their contract based income verification allows you to borrow without the high interest rates and fees that were often associated with Self Cert mortgages and could offer a life line to those Contractors who are coming to the end of a discounted or fixed term or are looking to purchase a house in the future.

Going directly to a lender and asking for a mortgage based on your contract rate would almost certainly end in failure as they will probably look at your short term contract and assume that you cannot afford the repayments. However, ContractorFinancials are able to secure your mortgage based on a multiple of your annualised contract rate alone which means you don’t have to worry.

With schemes available for Freelancers who are even within the first week of starting your first contract, there is a solution to fit almost all needs and the advisers charge Redego clients none of the usual brokers fees.

Contact Simon Foster on 0845 062 8888 , email simon@contractorfinancials.com or get in touch with Redego.

The FSA announced this week that they are likely to pull the plug on Self-Cert Mortgages

£10,000 free life cover for new parents!

Posted by Redego | Posted in Articles | Posted on 08-10-2009

Tags: Contractor, financial, Freelancing, Umbrella Company

As a Contractor, you may not have replaced your lost ‘death in service’ benefits that you used to benefit from as a ‘permi’. But when you become a parent the safety net that this cover provides becomes vital to protect your children if the worst should happen.

With this in mind, we can now offer life cover worth £10,000 absolutely free to new parents.

The joy of becoming a parent is often accompanied by an overwhelming feeling of responsibility for your new born. You begin to consider how you will create a safe home environment for your baby and how you will protect it if anything should happen to you. It’s easy to forget the importance of life cover when you get caught up in the excitement of a new baby, but with free cover for new parents it need not be a financial burden. The award winning protection advisers at ContractorFinancials can help you to arrange the cover without any hassle so you have more time to enjoy the important things.

How does the cover work?

Life cover offers an essential safety net to Contractors because if you die then it will pay out a lump sum or an agreed income to cover your families expenses and pay off any debts. At an already traumatic time, life cover offers the peace of mind for your dependents that they are protected financially and prevents them from being liable for any debts you leave behind.

You can insure yourself for a certain period in your life, for example until your children leave home, or you can choose a whole of life policy that will pay out no matter how old you are when you die. The insurance can be inflation proofed to ensure that the amount paid out upon death will be worth the same amount in spending terms as when you decided to take out the policy. This is particularly important for a whole of life policy as £100,000 now would hold a very different value in 30 years time.

The offer of £10,000 free life cover applies to new parents and as such you need to register for the cover before your baby is six months old. The offer applies to both parents and is per child so when you and your partner have a baby you can claim £20,000. If you are lucky enough to have twins then you can claim £40,000 free life cover and so on.

It is possible to take out excess cover on top of your free cover which you will need to pay monthly premiums on. We would advise Contractors to have enough cover in place to pay off any outstanding debts and also provide a safety net for your family to fall back on if the worst should happen. The free cover will end on the child’s first birthday by which time you should be back on your feet financially and able to take on the repayments which will be relatively low on this level of cover. Our advisers will be on hand to help you arrange an affordable cover to suit your individual needs.

How do I arrange the cover?

It is quick and easy to arrange your free life cover with ContractorFinancials. The award winning protection advisers will take your application details over the phone and the entire process can be completed via email, telephone and post. So you can arrange the right protection for your family without the hassle of a face to face meeting at this already hectic time.

As a Contractor, you may not have replaced your lost ‘death in service’ benefits that you used to benefit from as a ‘permi’. But when you become a parent the safety net that this cover provides becomes vital to protect your children if the worst should happen.

Why freelancers are still Government targets

Posted by Redego | Posted in News | Posted on 02-10-2009

Tags: Contractor, Freelancer, Freelancing, IR35

In last week’s Money Section of The Sunday Times the focus was very much on what all the main parties may take away in terms of ‘tax breaks’ if they form the next government. One of the eight key areas that the various tax luminaries interviewed thought would be on the political agenda was Setting up Companies because of the more favourable tax rates where profits are less than £300,000.

It is true that with previous recessions people have been forced out of careers and into freelancing, nevertheless it is difficult to agree with The Sunday Times view that to take advantage of lower tax rates we will “see a rush of high income earners to incorporate”, because as was pointed out in the article, one will need to be able to demonstrate that one is self employed.

However, it was interesting that one expert specifically referred to the Government potentially looking to tighten up the distinction between self employment and employment. The recent “False Self Employment in the Construction Industry” consultation paper which would spell the end of the labour-only subbie suggests that this is more than speculation. Can we therefore expect HMRC to try to reverse its poor yield from IR35 enquiries and start a new campaign against the freelancer? Or should we anticipate that Labour, or indeed whoever wins next year’s election, has something even more draconian in mind?

Also of concern was a reference to the Arctic Systems case being revived by Labour. Does this mean we will see Income Shifting make a return in the Chancellor’s autumn Pre-Budget Statement? The Government would love to stop small businesses distributing profits between husband & wife in favour of the spouse with the lower tax band, but can it come up with any legislation that is more workable than the 2008 draft which was dropped allegedly because of the recession?

What is evident from this line of thinking is that the second decade since the introduction of IR35 is likely to start off just as taxing for the freelancer. And as ever, it is important that contractors continue to take sound advice and be vigilant about how they protect their livelihood from an unhealthy interest by the taxman.

In last week’s Money Section of The Sunday Times the focus was very much on what all the main parties may take away in terms of ‘tax breaks’ if they form the next government. One of the eight key areas that the various tax luminaries interviewed thought would be on the political agenda was Setting up Companies because of the more favourable tax rates where profits are less than £300,000.

Treasury focus on ‘false self-employed’ in construction

Posted by Redego | Posted in Agency, News | Posted on 30-09-2009

Tags: construction, Contractor, PAYE, Umbrella Company

Treasury focus on ‘false self-employed’ in construction

HM Revenue & Customs (HMRC) have been exasperated for many years by the way the construction industry behave as if the rules on paying workers gross don’t apply to them.

They published a new consultation (July 2009) that has the look and feel of the finished article, so its more than likely to become legislation before the end of 2010.

Reading between the lines, HMRC see this as the final attempt to align the construction industry with other sectors and get 300,000 ‘false’ self-employed subbies on to PAYE. Genuine self-employed workers will be able to continue trading by passing a simple 3 criteria test. To qualify, sub-contractors would have to either:

provide their own plant & equipment (normal tools of the trade do not count!)

provide all the materials for a contract OR

provide other workers

So, how will the construction industry respond? To be fair to the industry, they have always had to balance between being ‘compliant’ with competing with other contractors who pay workers on a ’self-employed’ basis. To make matters worse, the test for employment status has always been complex, based on case law and constantly changing, so they could genuinely say they didn’t know whether a worker was self-employed or not.

Now there is a workable status test, and the Treasury’s intention has been clearly stated, most contractors will probably decide that the risk of non-compliance is too great and make arrangements to pay their workers through PAYE. They can do this through their own payroll or outsource to a compliant PAYE umbrella company, which will give workers the opportunity to claim legitimate expenses

HM Revenue & Customs (HMRC) have been exasperated for many years by the way the construction industry behave as if the rules on paying workers gross don’t apply to them.


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