Mar
14
2011
Umbrella company news: Risks of merging income tax and NCIs
Posted by Sarah Putt
Company umbrella contractors have been told that merging income tax and National Insurance Contributions (NCIs) could "make contracting considerably riskier".
This is the view of Ann Swain, chief executive of the Association of Professional Staffing Companies, who was commenting after the idea was suggested by the Office for Tax Simplification (OTS) in its Small Business Tax Review.
She explained that "limited company contractors are a vital component of the UK's flexible workforce", so any changes which could affect this career choice may prove to be costly.
Ms Swain also acknowledged that a combination of NCIs and income tax could be one area which could hinder a contractor's work, as it "would erode the tax advantages".
The expert concluded: "IR35 needs to be reformed, but the government needs to be careful that any alternative test is a genuine simplification and does not create the same uncertainty."
Meanwhile, the OTS has noted that suspending or abolishing this controversial legislation would see a rise in tax-motivated incorporation, though employees are likely to see the ruling as being unfair to them.
Company umbrella contractors have been told that merging income tax and National Insurance Contributions (NCIs) could "make contracting considerably riskier".
This is the view of Ann Swain, chief executive of the Association of Professional Staffing Companies, who was commenting after the idea was suggested by the Office for Tax Simplification (OTS) in its Small Business Tax Review.
She explained that "limited company contractors are a vital component of the UK's flexible workforce", so any changes which could affect this career choice may prove to be costly.
Ms Swain also acknowledged that a combination of NCIs and income tax could be one area which could hinder a contractor's work, as it "would erode the tax advantages".
The expert concluded: "IR35 needs to be reformed, but the government needs to be careful that any alternative test is a genuine simplification and does not create the same uncertainty."
Meanwhile, the OTS has noted that suspending or abolishing this controversial legislation would see a rise in tax-motivated incorporation, though employees are likely to see the ruling as being unfair to them.