Orange Genie News

Good contractor accountants can be difficult to find. From our position as contractor specialists it’s often frightening to see the kind of advice contractors are given by accountants in general practice. For example, we interviewed a lady who’d been advising locum doctors about the Public sector IR35 changes. When asked what her firm had done she replied,

                “Nothing, they’re all outside the changes as they all have contracts in different hospitals with different NHS Trusts, so more than one engager.”

It is bad enough that HMRC’s own inability to programme their own systems to deal with their own rule change mean that we and our Contactor clients are hugely inconvenienced needing to file the majority of Contractors Self Assessments for 2016/17 on paper rather than electronically: but now we know even their own staff don’t appreciate the magnitude of the issue and its impact.

In the last 48 hours we have interacted with different HMRC departments and offices and have evidence that this is a shambolic mess!

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.