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...]
Freelance contractors enjoy greater freedom that comes with having several short term contracts rather than working for a single permanent employer. It gives them greater flexibility in the work/life balance.
They can choose to take some time off when one contract ends, before accepting a new contract.
In comparison, a full-time employee is limited to taking time off by the number of holiday days in their contract. Also, a permanent worker cannot pick and choose what type of work they do. If their line manager gives them a task - it has to be done!
Contractors also get some tax breaks that their full time counterparts do not. There will be some business expenses that contractors can use to off-set against their tax bill. But it's critical to understand exactly what items HMRC allow contractors to claim. This can be confusing and complex - but there is a simple solution!
More and more contractors are discovering what's called an 'umbrella company'. This is an alternative to setting up and running your own one-man limited company. Not only is the umbrella company route cheaper, it is also a lot less hassle.
The umbrella company does all the administration and paperwork on behalf of the contractor. It takes care of the red-tape, deals with HMRC for you and stays up to date with the ever changing employment laws that affects contractors.
There are over 100 umbrella companies to choose from, so the choice is huge. Picking the right umbrella company that suits you means balancing price, customer service and features carefully. You don't want the cheapest company if they have terrible service and make you wait a long time for your salary to come through.
A personal recommendation is one of the best ways to decide which umbrella company service to use, but if that's not possible check out the feedback from other contractors.
Question about tax return expenses category? What is a scale rate expense? Do you know your tax breaks when working from home? Read the articles below and See how using an umbrella company could simplyfy your life as a contractor.
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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.