Skills shortages may push up hourly contract rates
The latest REC/KPMG Report on Jobs shows that the demand for engineering personnel has soared in recent months. Engineers are now the most ‘in demand’ type of worker, and the overall demand for staff across all industry sectors rose last month.
This is clearly good news for candidates (permanent and contract), and hourly rates are rising as a result of skills shortages in several sectors, as the REC’s Tom Hadley points out:
“All regions around the country are seeing permanent starting salaries and hourly pay rates continue to grow driven by skills shortages across an ever growing range of sectors.”
“Britain’s building boom and major infrastructure projects have seen demand for permanent construction and engineering workers soar this month – however recruiters are struggling to source skilled people to satisfy this demand.”
The total number of contract / temp billings during January rose at a marginally slower rate than was recorded in December 2013 (which itself represented a 15-year high).
For the full report, visit the KPMG site.
Employment Allowance – contractors unlikely to benefit from £2k tax cut
A new Government initiative, aimed at stimulating investment by small businesses, comes into effect on 6th April.
The Employment Allowance scheme reduces the Employers’ NI bill of eligible firms by up to £2,000. Up to 1.25m businesses are expected to benefit in some way, and 450,000 will pay no Employers’ NI at all.
Unfortunately, as most limited company contractors pay themselves small salaries – with little, or no Employers’ NI payable, very few will benefit from this initiative.
If you are caught by IR35, you cannot claim the allowance, as individuals who receive income in the form of a deemed payment are specifically barred from the scheme.
Section 660 raises its ugly head again
A First Tier Tax Tribunal has ruled that dividends distributed to the wives of two limited company directors, as a result of dividend waivers by their husbands, should be treated as an artificial arrangements under the terms of the Settlement Legislation.
In the case, HMRC argued that the plan was implemented purely to save tax by using the wives’ unused basic tax band allowances.
As a result of using dividend waivers on multiple occasions, the husbands had to pay an extra £27,500 to cover tax owed from three tax years ending on 5th April 2010.
Read a full report on Contractor Weekly here.
The average business is owed over £11,000 – time to use e-invoicing?
A survey carried out by SagePay last month found the average business is owed £11,358, and one in five is owed more than £30,000.
Although most small businesses owners have suffered from late payment issues at one time or another, many do not help themselves: an unbelievable 67% of respondents said that they still use paper invoices, and spend around two weeks per year chasing overdue invoices.
If you still use paper invoices, and would like to try an online accounting solution to reduce the amount of time you spent managing your cashflow, many specialist contractor accountants now have bespoke e-systems (or use third party software). Alongside SagePay, some of the other leading suppliers of third party software include FreeAgent, Kashflow and ClearBooks.