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Friday
Aug062010

Contractors Could See a Boost in Business as VAT Rises

As 2011 dawns we shall be on the road to seeing the rate of VAT rise from 17.5% to 20% - the highest it has been in a long time.

But who will benefit from this move?  According to some sources independent contractors could be the big winners, as more companies look to cut back on employed positions and use contractors instead.

When times are hard many businesses seek to make cut backs – and one of the prime areas for doing this is the workforce.  It can often be cheaper to bring in freelance contractors for occasional jobs than it is to keep someone on full time to supply the same services.

It is feared by some that the workforce will indeed be cut back as a result of the 2.5% increase in VAT at the beginning of next year.  What remains to be seen is whether the increase will really assist in bringing down the national debt.  Everyone realises that tough measures must be taken, but I doubt whether the job losses that could happen as a result will be welcomed by anyone.

I noticed that the British Retail Consortium has gauged job losses to be in the range of 163,000 over a four year period.  Perhaps the only winners then will be those who are currently freelancing, or those who may end up doing so if they are among the people who lose their jobs.

If you are currently freelancing and you want some professional tax advice – regardless of whether you currently pay VAT or not – come to us here at St Matthew.  We can advise you in confidence.

 



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