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...]
Gross payments are when the contractor pays the subcontractor gross (without any deductions for tax). To qualify for being paid gross the subcontractor has to pass the HMRC test. For HMRC to agree to register the subcontractor as qualifying for gross payments the subcontractor must:
The subcontractor has to pass three tests based on the information above. Theses tests are:
The subcontractor has to show that their business:
The subcontractor needs to prove to HMRC that their business turnover from construction work, excluding VAT and materials, for the 12-month period prior to application is at least:
The subcontractor must have submitted all tax returns and paid all tax due on time in the last 12 months before application. If HMRC agrees that the subcontractor qualifies to be paid gross then the payments must be declared in the tax return at the end of each financial year.
Should you be paid gross then you may be subject to a Tax Treatment Qualification Test (TTQT) also known as a Scheduled Review. This is where HMRC check that
[43564 Page Views]
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.