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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Are Training Costs an Allowable Limited Company Expense

Are Training Costs an Allowable Limited Company Expense?

Specific HMRC guidelines apply

In a Sentence

Yes and no! Whether or not training costs count as a business expense is dependent on what you are learning.

The HMRC rules surrounding training as a business expense can be complicated and do depend on certain specified caveats. This expert Guide will help you navigate your way through the rules relating to training costs.

It Depends

Probably not the answer you wanted to hear! The criteria surrounding training expenses is dependent on what sort of training you want to do, your employment status and the size of your limited company.

HMRC classify training in two separate categories. There is training that updates your existing skills set and training that gives you a brand new skill.

Updating Your Existing Knowledge

Personal development and professional training that you undertake to update your existing skills set is allowable as a valid limited company business expense. This comes under continuous improvement and on-going professional development.

If you are an IT contractor it could mean upgrading your knowledge on, say, scripting or programming to the latest international standards. If you are a health worker it may mean taking your annual refresher course and learning the latest, say, heart diagnostic understandings.

Training For a New Discipline

This is a big no-no. Your limited company cannot pay for you to learn a completely new set of skills, as a legitimate business expense. HMRC are very clear that this is not allowable and you will have to pay this for yourself.

HMRC's logic behind this ruling is as follows: "Tax law will treat such expenditure as capital (and so not allowable), for example on the grounds that in tax terms it gives rise to an 'enduring asset or advantage of a capital nature".

If you are in any doubt, why not put your specific training cost question to one of our Ask an Expert panel members?

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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.