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...]
You know what they say about Death and Taxes, well its true and best handled by accepting the fact even contractors have to contribute to HMRC.
Working people pay income tax relative to their gross salary. As an employee of your contractor limited company you will be paid a net salary. Your employer (your limited company) will calculate your income tax and National Insurance Contributions.
As a director of your contractor limited company you will have to complete a Self-Assessment tax return, including any dividend income. This has to be done by the 31st January following the end of your limited company's tax year.
Contractors, like all workers, have to pay two lots of National Insurance Contributions. One half is charged to the individual - Employees NIC, the other half is paid for by the limited company - Employers NIC.
You will appoint a specialist contractor accountant to help you with calculating what tax you owe. They will take into account the tax-free element of your income and the varying rates of income tax and NIC.
You will be told what you owe, who to make the payment to and when the payment has to be made. It's important you heed their advice to avoid late payment penalties. Normally, you will have to make payments once a quarter.
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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.