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...]
Are you new to contracting? Are you looking for an IR35 umbrella company? If you are you could be looking for some time yet - because there's no such thing as an 'IR35 umbrella company'. IR35 is simply an HMRC reference to a certain legislation which stops contractors avoiding tax.
All umbrella company services operate within IR35 because they tax their clients at source in line with PAYE rules - just like a full-time employee of any company.
You can see if you fall Inside or Outside of IR35 using the IR35 Status Calculator
In fact, when a contractor uses an umbrella company they become an employee of their umbrella company. The umbrella (the employer) will invoice and collect your earnings from your recruitment agency, calculate what tax you owe as an employee then pay you a net salary.
The contactor pays: income tax and National Insurance. The contractor does not get any dividends.
All umbrella companies operate the same way (in terms of tax) and all umbrella company services are fully aware that IR35 has no bearing on their clients.
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If you are or plan to be a freelance contractor, you must get to grips with IR35. Ignore IR35 and it could cost you thousands!
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.