Employment Status

Are you a contractor? If you work for someone else, it is important to know whether you are working for that person in an employed capacity or in a self-employed capacity as an independent contractor.

Your employment status will determine the charge to tax on income from your employment or self-employment. It will also determine the class of NICs, which are to be paid.

Umbrella Companies employ you for tax purposes and complete central returns for all their contractors. It's less hassle and more flexible for you but take home pay is typically less than that the limited company option.

The best option for you depends on your plans, 'one off' contract or 'contractor for life'? [Read More...]

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How to Pass IR35 IR35 Legislation

How to Pass IR35

As a contractor you want to earn as much money as possible. Why else would you give up the security of working as a full-time employee of a company?

  • Working as a contractor will secure you a higher rate of pay. Another way of increasing your income is to reduce your tax bill.

If you trade through your own limited company you can reduce your income tax and National Insurance contributions.

But not every contractor has the luxury of being able to do this. HMRC are very hot on the taxes temporary workers pay. You will only be able to benefit from trading through your own limited company if you pass the IR35 test.

Yes or No?

  1. Are you your own boss? Or do you report to a line manager?
  2. Do you correct any errors in your own time?
  3. Do you risk any of your own money?
  4. Can you use your own team to help with the job?
  5. Do you use your own equipment? Or does your client provide everything you need?
  6. Do you work at your own office?
  7. Do you work the hours that you want?
  8. Are you expected to personally do the work?
  9. Do you get paid per project rather than hourly/daily?

If you can answer 'Yes' to these questions you should investigate setting up your own limited company.

  • However, if you answer 'No' then it's highly likely you are caught by the IR35 legislation.

Earn More

All is not lost if you are caught by IR35. You can still be a contractor and you can still earn more money than a permanent employee.

You should investigate registering with an umbrella company. An umbrella company is simply a ready-made limited company used by contractors who are caught by IR35.

What is Your IR35 Status?

You can see if you fall Inside or Outside of IR35 using the IR35 Status Calculator

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HMRC Compliance

It's the basics... Compliance with Tax, VAT, PAYE and fiscal arrangements is mandatory for contractors regardless of whether you use an umbrella company or your own limited company.

Incredible then that there are still rogue umbrella companies and limited company accountants who expose their contractors to fraud. Umbrella Compare provides THE solution, we thoroughly vet all umbrella companies and limited company accountants that we list [Read more...].

Umbrella Compare provides a holistic overview of contracting with the aim of helping new and old contractors find the right payroll solutions. Contracting should be about focusing on the contract, not payroll, accounting, HMRC and bureaucracy.