Should I hire a Limited Company Accountant before the Autumn Budget?

With the new Labour government now in place, many self-employed workers anxiously await changes that could impact them and their businesses. This week, the new Chancellor, Rachel Reeves, announced that the Autumn Budget 2024 will be delivered on October 30th, 2024.

As the first Budget presented by a Labour Chancellor since 2010, there is considerable anticipation among contractors and small business owners about potential new measures. 2010 Chancellor Alistair Darling targeted contractor tax schemes under the previous Labour government.

Reeves has already hinted at potential tax increases, stating that public finances are worse than Labour had anticipated before taking over from the Conservatives.

In the months leading up to the election and subsequent change of government, the previous administration had promised not to raise national insurance, VAT, or income tax. These taxes account for two-thirds of UK tax revenue, and with the public finances in worse shape. Than expected, balancing the Budget may prove more challenging for Reeves than initially thought.

One of the key manifesto promises expected to be included in the upcoming. Budget is the removal of the VAT exemption on private school fees, a measure projected to raise £1.5 billion. However, this amount is minor compared to the £22 billion deficit that Labour has inherited. Which has already been earmarked for funding education policies, including the recruitment of 6,500 new teachers.

Labour’s manifesto promises to close the carried interest tax loophole and intensify efforts to combat tax avoidance.

Additionally, Reeves has committed to holding only one major fiscal event each year, ending the era of “surprise budgets” that have become commonplace. She has only one opportunity to outline the government’s agenda for the next 12 months.

Will IR35 be addressed in the Autumn Budget 2024?

Ideally, contractors would see the Off-Payroll Working Rules repealed, ending the mishandling of IR35 determinations by organizations that engage contractors. Many tax experts are hopeful for a return to Labour’s original IR35 framework from 2000, but this seems unlikely.

In 1999, Gordon Brown announced plans to introduce legislation addressing “avoidance in the area of personal service provision.”

At that time, the government was concerned about the growing trend of ‘disguised employment,’ where individuals provide services to an organization like employees but operate as limited companies. This arrangement allows contractors to benefit from a lower tax liability than traditional employees.

As a result, IR35 was introduced in April 2000. These tax rules ensured that individuals who would ordinarily be classified as ‘employed’ by HMRC are taxed accordingly rather than as ‘self-employed.’

Since its introduction, IR35 has faced significant criticism, leading to the formation of. The Professional Contractors Group (now known as IPSE) to oppose the legislation.

The IR35 rules have pushed many contractors back into traditional employment, increasing PAYE and National Insurance contributions for HMRC. Because of this, some experts believe that a move towards a ‘Single Work Status’ approach might be more likely than a return to the original IR35 framework.

What is Single Work Status for Limited Companies?

Some experts believe that the introduction of the Single Worker Status could impact how IR35 status is determined.

In Labour’s ‘Plan to Make Work Pay,’ published in May, the concept of Single Worker Status involves creating a new, unified worker classification as part of broader efforts to enhance pay and working conditions. This initiative also aims to simplify resourcing and compliance for businesses. Particularly for those who are self-employed but operate as limited companies. The new framework is expected to clearly distinguish between genuinely self-employed individuals and other workers.

Currently, the three tiers of worker status—employees, self-employed individuals, and other workers—come with different rights, most notably in how taxes are paid. With the increasing prevalence of short-term contracts, often associated with the “gig economy,” determining an individual’s worker status has become more challenging, creating a grey area that has raised government concerns.

What changes would Labour’s Single Worker Status Provide?

Contractors would be reclassified as ‘workers,’ entitling them to employee benefits and protections like holiday pay, sick pay, redundancy rights, and protection against unfair dismissal. They could also become eligible for statutory benefits such as family leave and the ability to request flexible working arrangements.

While many self-employed individuals value their current flexibility, this change may introduce more restrictive conditions regarding project selection and working hours. This could impact contractors’ ability to work with multiple clients simultaneously, especially considering the potential for increased liabilities with HMRC.

Additionally, contractors may face increased administrative burdens, including dealing with legal complexities and more extensive bookkeeping.

Do you need to hire a Limited Company Accountant?

With potential changes on the horizon following the Autumn Budget 2024 announcement. Now is an ideal time to consider partnering with a limited company accountant like Account Ease.

While running your own limited company can be an exciting and rewarding experience, many self-employed individuals prefer to manage it independently. However, enlisting the help of a professional to free up your time and provide expert guidance is crucial for long-term success.

A limited company accountant specializes in handling the financial affairs of limited companies. Our experienced team is well-versed in the intricacies of UK tax law. Company regulations, and accounting standards, ensuring you stay ahead of any changes 2024 may bring. Their expertise is invaluable in maintaining your business’s compliance, efficiency, and financial health.

Benefits of Hiring a Limited Company Accountant

Expertise in Tax and Compliance:

Navigating UK tax laws and company regulations can be challenging due to their complexity. A limited company accountant stays current with the latest regulations and can manage Corporation Tax, VAT, and other financial obligations on your behalf. They ensure you claim all eligible allowances and deductions, which could result in substantial savings for your business.

Time Management:

Balancing the demands of running a business while handling accounting tasks can be overwhelming and time-consuming. An accountant can relieve you of these responsibilities, allowing you to concentrate on your core business activities.

Financial Reporting:

Accurate and timely financial reporting is essential for making well-informed business decisions. Accountants can assist in preparing financial statements, managing bookkeeping, and providing valuable insights into your company’s financial health. This information is critical for understanding cash flow, profitability, and effective budgeting.

The Autumn Budget 2024 & Being Prepared

With uncertainty surrounding the upcoming announcements, particularly whether Reeves will maintain the basic rate of corporation tax. Revisit marginal tax thresholds, or potentially increase the Capital Gains Tax personal allowance. The situation remains unclear until closer to the announcement.

However, by partnering with Account Ease as your limited company accountant. We can guide you through the next stage of your business growth.

The Chancellor has emphasized that “The Budget and Spending Review will also set out further progress on our No. 1 mission: to grow our economy. Economic growth is the only way to sustainably improve our public services and our public finances.”

She also highlighted: “If we can create the stable conditions that investors need to thrive, we will return confidence to our economy so that entrepreneurs and businesses, big and small, know that this is the best place in the world to start and grow a business. That is the bedrock on which economic growth must be built.”

Hiring a limited company accountant goes beyond compliance; it’s about positioning your business for success. The right accountant offers more than just financial management. They can serve as a trusted advisor and a vital asset to your company.

Whether you’re just starting or planning to expand, investing in professional accounting services provides peace of mind and supports your long-term business goals. You can learn more about our limited company accountancy package here.