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The revamp of R&D relief will commence from April 2024, combining the two systems and lowering the intensity threshold from 40% to 30% for SMEs with a soft landing. The Chancellor has decided to eliminate Class 2 National Insurance contributions for self-employed individuals and reduce the rate of Class 4 NICs. The Chancellor has announced that full expensing, a tax break for investments in IT equipment, plant, and machinery, will now be a permanent fixture, eliminating the previous uncertainty caused by its three-year limit. Another announcement was in relation to a 2% reduction in the employee National Insurance rate, bringing it down to 10% starting in January. This change will decrease the total tax for basic rate taxpayers to 30%. In addition a £4.3bn support package for small businesses over the next five years has been announced. This includes freezing the small business multiplier at 49.9p for the fourth consecutive year, while the standard multiplier will be increased to 54.6p by September. The small rate multiplier will also be adjusted to match the Consumer Price Index (CPI) inflation.

So what is the main difference between tax avoidance and tax evasion? Let’s put it simple – Tax avoidance is legal and tax evasion is not.A lot of people already do tax avoidance by having an Individual Savings Account (ISA), or paying some earnings into their Pension pots (like SIPP), which is a legal way to reduce you income tax. Businesses and sole traders can decrease their tax bill by claiming business related expenses, which is perfectly legal and the right way to do business.

As the self-assessment tax return deadline looms within the next 100 days, a concerning revelation emerges: 75% of self-employed individuals lack clarity on the point at which higher rate tax obligations kick in. We need to remind our clients about the importance of gaining control over finances, including tax payment and budgeting, which can alleviate the strain associated with self-employment and make the process of preparing for the January 31 deadline less burdensome.

As a self-employed Contractor working through a Personal Service Company (PSC) there are a few things to keep in mind when you put a Contract in place for the services you provide. If not done properly, your company could potentially be considered as trying to avoid paying correct tax and national insurance on your income. The best thing you can do for your work situation is to make sure that the contract you put in place doesn't make you look like a false self-employed contractor. To do this, get the help of an expert, who can ensure your contract follows the HMRC guidelines for what constitutes a genuine self-employed contractor. And here at Accounting Minds we can clarify all those important points for you and help you determine your correct status in relation to IR35.