New rules will be introduced in April 2000 to counter what the Chancellor believes is a popular means of reducing Income Tax and National Insurance Contributions.
The rules will target individuals working under consultancy agreements or in personal service companies if the Inland Revenue considers them to be employees in all but name.
There are many advantages of these so called 'one man band' arrangements. They provide a means of avoiding employee & employers NIC, greater scope for tax deductibility of expenses and valuable cashflow benefits in timing tax payments. These benefits will be severely restricted under the Government's proposals.
The planned changes will significantly affect both contracting companies and the individuals providing the service. Those likely to be affected should carefully review their exposure to the new rules.
The detailed taxation provisions of the new rules will be in the Finance Bill 2000.
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