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...]
It's important to be aware of some the more common misconceptions surrounding PAYE umbrella companies.
Beware the unscrupulous providers that state they can offer more money, more expenses and less tax than other umbrella companies. Really, the only differences between umbrella companies are
a) Feesb) Service levels
It's your money and your responsability, if your tax affairs are handled incorrectly you cannot simply 'pass the buck' if your umbrella company is not correctly accounting for your taxes. DON'T PANIC!! There are lots of profesional, failry priced compliant umbrella companies out there [you can compare the best vetted umbrella companies here]. It's simply a question of knowing what to look for. Here are the top 5 umbrella company myths that you should watch out for. Keep a sensible head on - if the offer seems too good, it most likely is.
This is completely untrue. It doesn't matter which umbrella company you join, you will have to pay statutory tax amounts set by HMRC.
A dispensation simply lessens the amount of administration for the umbrella.
It means you don't send the physical receipt into your umbrella company every week - and they don't have to store them.
They can take you at your word, but you still need to collect and keep the receipts for your records (in case HMRC ask).
Your umbrella company's dispensation allows you to claim up to a certain limit for subsistence (food and drink) and accommodation, however that does not mean that you can claim the maximum allowance every single day.
E.g. If the umbrella company allows you to claim up to £14 per day, you may actually only spend £8 a day - so you would only claim £8 and not the full £14.
As soon as you anticipate that you will be working on one assignment (or that it may be your last assignment) your right to claim travel and subsistence expenses will cease. This is because your workplace will no longer be deemed as being temporary.
The 24 month rule cannot be avoided by changing umbrella companies. As soon as you anticipate that your contract will run over 24 months your right to claim travel and subsistence ceases - you cannot change your umbrella to avoid this.
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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.