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Tax simplication good news for contractors

Yesterday’s Queen’s Speech, made at the state opening of parliament, contained hints that tax reform is high on the coalition’s agenda over the next 18 months.

The Lib-Con government intends to set up an independent Office of Tax Simplification and specifically stated that personal income tax allowances would be increased significantly. The longer-term aim is to have these increased to £10,000 which was one of the goals laid down by Nick Clegg and his Liberal Democrat party.

The new government also wants to pass a National Insurance Bill that will increase both and thresholds as from April 2011. If passed, this would raise an additional £9bn whilst still ensuring that most people would be better off than if the Labour government had remained in power.

The Queen's Speech also mentioned the pensions age. The age at which people retire was due to rise to 66 between 2024 and 2026, but this will be reviewed and might be brought forward.

Although the Queen's Speech was broadly welcomed by business groups, they still want the government to provide more details.

Jane Bennett from the FPB said that the speech contained nothing that would cause alarm to small businesses and limited company contractors, but they are likely to remain in a state of limbo until the Chancellor presents his budget on June 22nd.

Research carried out by earlier this year showed that three quarters of small businesses and freelancers believe that if the government simplified the tax system it would give them a chance to expand their business.

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