Autumn Statement 2016: What this means for your income tax

It only requires annual inflation of 2.85% to make that £12,500 a below inflation target.

And why haven't the other bands been increased (SRA, PSA, DA)?

I see a lot of paperwork for accountants who have lots of freelancers/contractors on the books next year as they all start switching onto the standard VAT scheme after today's announcement.

Needless to say I'm unhappy about the additional admin burden. I think I know why this change has been made and yet again freelancers and small businesses are caught in the crossfire.

Thankfully I don't generally work for public sector clients either, with these changes to IR35 that the government seems intent on pushing through...

@TheCyclingProgrammer:

1. It is totally inappropriate for HMT to describe my clients who happen to buy little in the way of VATable goods as being aggressive abusers by their legitimate use of the FR scheme.

2. Lets see how they legislate for this - and how the "easy-to-use online tool that will help determine whether they should use the new rate" works out - if it works at all

polymaff wrote: »

@TheCyclingProgrammer:

It is totally inappropriate to describe businesses which happen to buy little in the way of VATable goods as being aggressive abusers by their legitimate use of the FR scheme.

I feel the same.

Yes, I'll switch over the standard VAT scheme and I'll get used to the additional burden of making sure all of my expenditure is covered by a valid VAT receipt and the extra admin etc.

But I seriously resent the underlying implication that just because certain sectors typically made a small profit from the scheme as a result of the way it works that we were all "aggressive abusers". If a sector was routinely making a profit from the scheme then the government could just as easily tweak the rate by 0.5-1% to balance it out.

I'll be the first to admit that as a software consultant/developer my overheads are relatively low - but then that's the point of having different flat rates for different sectors isn't it? I still do have costs, but because my costs are mostly services (accountancy fees, software, web hosting etc.) and most hardware I'd buy would be treated as a capital purchase then I'm deemed to be a "limited cost trader" even though my costs could be higher than somebody who just buys widgets.

I'll bet one thing - that the legislation which eventually emerges will create a serious opportunity for work-around developers.

Cue more petulant screams of "B*****ds!" from HMT!

Maybe. I've no interest in clever workarounds - and I'm sure some people will try and be inventive - I'm just going to switch to the standard scheme and be done with it.

My suspicion is that this has come about because of stuff like this:
https://www.theguardian.com/uk-news/2016/nov/15/revealed-temp-agencies-avoidance-scheme-costs-taxpayers-hundreds-of-millions

deejaybee wrote: »

Hi

Can i ask what is changing with the VAT Flat Rate Scheme ?

I am a self-employed courier, and currently on FRS.

Thanks

It's effectively been made financially unviable for anyone with whose overheads mainly consist of services rather than goods.

https://www.gov.uk/government/publications/tackling-aggressive-abuse-of-the-vat-flat-rate-scheme-technical-note/tackling-aggressive-abuse-of-the-vat-flat-rate-scheme-technical-note