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...]
Much has been said about the IR35 tax law which brought to an end a very lucrative contracting lifestyle for some. The Labour Government brought in this new law back in 2000.
It wasn't directed at all contractors, just the ones who were really working in effect as employees of a client but doing so via a limited company.
Many such individuals used to work as an employee for a company, resign their job on a Friday then turn up the following Monday - doing the same job, at the same desk, for the same manager - but as a contractor and not an employee.
IR35 stops that. There are no precise figures, but it's reckoned that 85% of IT contractors are caught by IR35.
Consider your own working habits, if you say ‘yes' to any of the following questions you are probably caught by IR35 and working through your own limited company is not a viable means of reducing your tax bill.
Anyone who is caught by IR35 is simply wasting money and time if they trade through their own limited company.
You can see if you fall Inside or Outside of IR35 using the IR35 Status Calculator
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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.