Orange Genie News

April 28th saw the launch of the government’s new Tax- free Childcare scheme. First announced in 2013, the scheme provides working parents with much needed help paying for childcare. Supported by National Savings and Investments the scheme is open to everyone and does not rely on your employer choosing to offer a Childcare Voucher scheme.

The current/old scheme

Basic-rate taxpayers are able to claim up to £243 worth of vouchers every month. Higher and additional-rate taxpayers can take less (£124 and £97 respectively).

If you’re a parent, you’ll understand the desire to see your kids succeeding in life. With advantages like free higher education and affordable housing beginning to look like impossible ideas from utopian fiction, many young people are struggling and as a result the Bank of Mum and Dad is doing a roaring trade.

For many parents, this will be sobering news. In a world where your kids might need your support long after they leave home, the value of sound financial advice and expert wealth-planning is difficult to over-state. Orange Genie contractors can easily access the specialist advice they need through our partnership with Contractor Wealth, but many contractors are not so lucky.

Research from FTSE 100 financial services group Legal and General and economics consultancy Cebr indicates that £6.5 billion will be lent by parents in 2017. This is up from £5 billion the previous year. This money will fund deposits for over 298,000 mortgages and 79% of it will be lent to people under 30. These findings put the Bank of Mum and Dad on a par with the ninth largest mortgage lender in the UK, with involvement in over a quarter of all property transactions this year. 

HMRC have recently admitted that they’ve been unable to update their software to cope with how the dividend tax allowance interacts with other allowances. They say they’re planning a fix for 2017/18, which means thousands of tax payers will have to submit paper returns for tax year 2016/17.

Confidence in HMRC is further undermined by their attempts to downplay the scale of the issue. HMRC themselves estimated the number of PSCs to be 265,000 in 2012/13, and set to increase by 65,000 per year. This would leave the current number at around 525,000, and this issue doesn’t just affect PSCs; anyone with dividend income is affected. We’re therefore surprised to see HMRC describing this group as “a small number of tax payers”, especially given the resources devoted to developing legislation specifically to target them.

The Finance Bill has passed through the House of Commons and we can now be sure that it will become law. This includes the terribly unpopular reform of off payroll working in the Public sector. However, several other clauses have been removed to facilitate the bill’s swift passage.

One such casualty was the section that reduces the dividend allowance from £5000 to £2000. So, for now at least, the dividend allowance remains at £5000.

Helen Christopher, Operations Director at Orange Genie Accountancy said, “In the short term this is good news for contractors who can continue to take £5000 dividends tax free...

Why is it important for freelancers to consider insurance options? 

You will be aware that running your own business brings new challenges and responsibilities. It is in your best interest to ensure that all aspects of your business run as smoothly as possible and Orange Genie Accountancy recommend that you carefully consider insurance matters.

If you’re a director of your own company you will need to consider the following:

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