From 1 April 2017 contractors registered under FRS will be required to consider whether their qualifying expenditure exceeds the minimum threshold, each year, and where the minimum threshold is not met, the new category must be applied. Contractors will be able to revert to their previous category if, during the future, their qualifying expenditure exceeds the threshold.
The detail of the scheme's operation will be set out in legislation expected on 5 December 2016. This should provide clarity on what expenditure qualifies (please refer to disclaimer text above).
Anti-avoidance measures will be in place to restrict the opportunities to manipulate income and qualifying expenditure.
This calculator is intended to help you assess the impact of the planned changes. Please move the sliders as appropriate in your circumstances. For expenditure, you should exclude any asset purchases, subsistence and motoring costs and be aware that the question of the cost of services remains uncertain.
After the draft legislation is issued on 5 December, we will understand more about the full impact of these changes. We plan to release a general guide to how Limited Company contractors will be affected and, as usual, our clients will have access to tailored advice based on their personal circumstances.