The FreeAgent Blog
In case you didn’t already know, HMRC have proposed some significant tax changes that could have a big impact on contractors working in the UK.
Essentially it boils down to this: the government believes that there should be a “level playing field” between employees and contractors who, on a day-to-day basis, “do the same job”. And, as a result, HMRC is seeking to prevent contractors who work through an intermediary - such as an umbrella company or personal service company - from claiming tax relief on travel between home and client sites in cases where the contractor’s work could be subject to “supervision, direction or control” by another party, such as one of the client’s staff or a project manager. If that all sounds complicated, check out this handy guide by our friends at IPSE that explains a lot of the detail.
These proposals would affect a huge number of UK contractors, and will have a major impact on the amount of tax they will have to pay in the future. But many of the organisations that work with contractors (including us) also have big concerns about how the proposals will actually be implemented.
We recently held a multi-organisational tax summit here at our Edinburgh HQ to discuss the proposed HMRC changes. Our panel included: Mark Beal-Preston (Managing Director - First Freelance), Neil Armitage (Operations Director - Umbrella), Adam Becker (Finance and Tax Director - Futurelink Group), Lorence Nye (Policy Advisor, Economics - IPSE) who joined us in sharing views about how the proposals will affect the UK’s contractor industry. We were also delighted to be joined by John Whiting, Tax Director of the Office of Tax Simplification and AccountingWEB’s Tax Policy Editor Rebecca Cave.
The discussions have helped form the basis for an official response from FreeAgent that we’ve now submitted to HMRC. Our other delegates will likely be submitting their own views too, but here’s our take on the issue.
- We think the whole idea behind the proposals is fundamentally flawed. Although employees and contractors may “do the same job” on a day-to-day basis, contractors have a much higher business risk; they must find contracts, keep their own books, deal with payroll themselves, and are not entitled to sick pay, holiday pay or to employment benefits such as medical insurance. This additional risk must be balanced by additional reward, since small businesses and contractors are such a crucial part of the UK economy. So there doesn’t really need to be a “level playing field”.
- The proposals will be hugely difficult to administer or adhere to. Freelance engagements change over their lifetimes, are often carried out concurrently and not all of them will be subject to the right of supervision, direction or control - so calculating what can and cannot be claimed from will be extremely confusing.
- Many business owners may opt to trade as sole traders instead, with the inherent risk of the loss of limited liability and business credibility. But if they do this, they may also end up losing work - as engagers may refuse to accept contractors who are sole traders because they would then bear any liability imposed under IR35.
- We believe that this approach will cause a great deal of confusion and uncertainty and would prefer an alternative approach such as allowing travel and subsistence claims for any home to work journeys longer than the national average. Otherwise genuine contractors will be dissuaded from accepting certain contracts and the flexible workforce will become less mobile.
We hope that HMRC will consider our response carefully, as we believe that the current proposals could be potentially damaging for contractors - and create a legislative nightmare for their accountants to deal with.
If you’re a contractor and you also have concerns we’d also recommend speaking to your accountant to get the full details about the proposals and how they may affect you. After that, you’ll have until the end of September to submit your own response to HMRC about the changes.
Looking for a new tech job? Why not come to Edinburgh! Here at FreeAgent, we’re part of StartEDIN, a group of local tech businesses that have joined forces to shout from the rooftops about why Edinburgh is such a great place to work, particularly in the booming tech industry we have here. There are far more reasons why Edinburgh is the best place to find your next job than we can possibly list, but here are our top nine.
1. A thriving tech scene
Whether you’re a recent technology graduate or simply looking for a change, Edinburgh deserves a place at the top of your list for job opportunities. The Scottish capital is beginning to emerge as a major technology hub; new tech companies are being formed here in record numbers. Over the last five years, the University of Edinburgh has supported 144 start-ups, most of them in the tech sector. There’s never been a better time to get involved!
Edinburgh also has some of the highest average salaries for tech workers, and was listed as one of the highest paying cities outside London for permanent salaries.
2. Amazing places to work
Think that fun tech companies only exist in London? Think again!
Our fellow members in StartEDIN are all obsessed with creating gorgeous office spaces buzzing with energy and packed with all the tools you need to achieve your best work. Skyscanner and Fanduel have particularly outstanding offices and our shiny new digs here at FreeAgent aren’t half bad either!
"FreeAgent is filled with intelligent people performing at the top of their game. It's such a pleasure to work with people who love what they do!"
Andy Stabler, Junior Software Engineer
3. Loads of interest groups and tech meetups
Want to work on your own projects outside of work? You’re not alone!
Edinburgh is home to a number of great clubs and societies where tech enthusiasts can meet like-minded people. Here are a few of our favourites:
- TechMeetup offers an opportunity for you to talk with fellow techies about your projects.
- Edinburgh Hacklab gives you the resources, space and support for your latest project.
- DevOps Meetup provides a forum to discuss technology and processes with fellow tech professionals from similar organisations.
- ScotRUG hosts monthly meetings for Ruby on Rails enthusiasts.
Whatever your hobby, Edinburgh probably has a club for it – from board games, wine tasting, and live action role play, to rock climbing (on the largest indoor wall in the world, no less), kayaking and horse riding, and a whole lot more in between.
"I've found Edinburgh to be a great place to live and work. There's a lively tech scene, with a good number and variety of companies and interesting meetups. It's also a very walkable city, with plenty going on year-round from the Fringe to music, sport and the Science Festival."
James Bell, Software Engineer
4. A better standard of living
If you’re tired of spending all your hard-earned cash renting a postage stamp-sized apartment in a huge city, you could see your money go much further in Edinburgh.
Edinburgh is a consistent contender for top spot in UK living standards surveys, with high average salaries and a low rate of unemployment. A recent national survey by Money Supermarket found that the cost of day-to-day living in Edinburgh is cheaper too – £372 a week compared to a UK average of £401 – and Edinburgh’s average rental prices are the lowest in the whole of Britain.
"I love Edinburgh. It's beautiful and it’s the perfect size. When I lived in Madrid I needed a car to go anywhere; in Edinburgh I don't need a car and I have a 20-minute commute walking to the office.”
Alberto Fernández-Capel, Software Engineer
5. Lots of great places to eat, drink and be merry
Edinburgh is one of the best places in the world to wine and dine, with more restaurants per head than any other UK city and the highest number of Michelin-starred restaurants outside of London. From the high-end restaurants by the Shore to the casual diners in the shadow of Edinburgh Castle, you’ll never be short of places to eat out.
6. Festival season
In the summer Edinburgh transforms into a festival hub, with the world’s largest arts festival, the Festival Fringe, taking over the city. If the Fringe doesn’t tickle your fancy the International Festival, Film Festival, Art Festival, Book Festival, or Jazz and Blues Festival might offer something more to your tastes.
If that wasn’t enough, Edinburgh also celebrates its scientific heritage in the spring with the International Science Festival and reflects on its proud place in literary history in the autumn with the Storytelling Festival. Whatever the time of year, there’s always plenty to do!
The celebrations keep coming with Edinburgh’s famous Hogmanay event rounding off the year as part of the annual Christmas festivities. Watch Vikings play with fire in the torchlight procession on Calton Hill before singing 'Auld Lang Syne' at one of the world’s largest street parties lit by an explosive fireworks display from the castle.
8. Plenty of green space
Edinburgh is full of wide open spaces, perfect for relaxing after a hard day's work. From a picnic in the expanse of the Meadows in the city centre, to a gentle hike up Arthur’s Seat (an extinct volcano), you’re never far from somewhere to get away from it all. There are also a number of secret gardens hidden among the city’s labyrinth of winding alleyways.
If you fancy going further afield, the open countryside of the Pentland Hills Regional Park is a short bus ride away with hiking, mountain biking, paragliding and year-round skiing on Europe’s largest outdoor dry ski slope.
"I wanted a challenging role in a vibrant city centre, but also wanted to be able to hike and see the countryside in my free time. For this reason, Edinburgh was a natural choice for me.”
Andy Stabler, Junior Software Engineer
9. Inspiration at every turn
From Alexander Fleming’s discovery of penicillin to the cloning of Dolly the sheep at the Roslin Institute, Edinburgh has been the backdrop to a number of inspiring innovations over the years. Here are a few for starters: the flush toilet, the blackboard, the electric clock, the telephone, the picture postcard, the electric bread toaster and where would we be without Alexander Grant’s 1984 invention, the digestive biscuit?
Is there a tech job in Edinburgh for you?
Here at FreeAgent, we’re on the lookout for software engineers, engineering managers and support engineers as well as interns for a variety of roles. Take a look at our jobs page to find out if you could become our newest recruit!
If you have employees you should be aware of auto-enrolment. You might even be worried about what you need to do. Well worry not - we’ve got your back.
If you’re a complete auto-enrolment newbie then start by reading this guide to automatic enrolment, which explains what it is, who it applies to and what you need to do.
Once you’re up to speed, we’ve made your auto-enrolment duties a lot easier thanks to a few new features in FreeAgent.
Enter your staging date and scheme details
If auto-enrolment applies to you (if you’ve got any employees it probably will) you should have already been issued with a staging date. This is the date after which you need to enrol all eligible employees in a pension scheme.
You can enter this date in the Settings > Payroll screen, and as soon as this date comes around the auto-enrolment features in FreeAgent will kick in. If you’re using a pension scheme from NOW: Pensions you can also enter the details here.
2. Assess who is eligible
FreeAgent will flag employees who we think are eligible for auto-enrolment based on their age and earnings, and will highlight these employees on the Payroll Dashboard.
You should confirm this yourself and update the payroll profile for each employee, indicating whether they are eligible or not, and if they’ve decided to either make pension contributions or opt-out of auto-enrolment.
3. Download your contribution file
On a monthly basis you’ll need to inform your pension provider about who is enrolled and what contributions are being made.
On the Payroll Dashboard you’ll see an option to “Export auto-enrolment CSV” for each month. This exports a file which can be imported into your pension provider’s system. If you’re using NOW: Pensions you can upload the file straight away. If you’re using another pension provider, however, you may need to edit the file format before uploading.
We’ve got more details on this and everything else auto-enrolment in the appropriately titled 'How FreeAgent handles automatic enrolment for pensions' Knowledge Base article.
In case you missed the news on Twitter, we’ve teamed up with HMRC to deliver a series of helpful webinars for freelancers and small business owners!
The webinars are delivered by HMRC’s super-friendly online education team and are designed to answer some of the burning questions they receive regularly from self-employed people.
In our most recent joint webinar, the HMRC team provided a whole range of guidance on how freelancers and small business owners can keep effective business records - you can watch the recording here. The webinar covers:
- the benefits of keeping good business records
- tips for keeping and maintaining business records
- tips for avoiding common record-keeping pitfalls
- guidance on keeping records for VAT
- record-keeping tips for employers and limited company directors
Showing 1 - 4 of 596 Articles · Page 1 of 149
- Potential contractor tax changes from HMRC - our official response
- Nine reasons why Edinburgh is the best place in the UK for your next tech job
- Auto-enrolment, covered
- Learn how to keep tip-top business records with our joint webinar with HMRC
- Case study: How I use FreeAgent’s integration with Timestamp
Emily Coltman @freeagent explains the 5 VAT pitfalls for #SMBs to avoid http://t.co/KJKhKwGoxe #business @BizMattersmag
A great start to the day as always, thank you all for coming and our wonderful supporter @freeagent #CreativeCircles http://t.co/JtSWioTSdl
Thank you @freeAgent for "switch money in/out". You've just saved me from a major meltdown
@freeagent @_tommylong They give away nice sweets too. Hint, hint, nudge, nudge.
Really enjoying hearing from @freeagent users here at #agilecam :)