Contracting Matters Blog
In the aftermath of the credit crisis, freelancing has grown at an unfaltering rate in the UK. Since 2009,the number of self-employed workers has grown by 6.3%. Compare that to only a 2% rise in the overall job market and we wonder where this growth’s coming from.
Lords pack extra clout as Private Sector IR35 postponed
Posted by on March 18th, 2020 in Contracting Matters Blog
Contractors - and the industries that support them - breathed easier last night. Steve Barclay announced a 1-year postponement of the widely-condemned Private Sector IR35. Last night's statement read:
"The government is postponing the reforms to the off payroll working rules, IR35, from April 2020 to April 6, 2021.
"This is a deferral in response to the ongoing spread of Covid-19 to help businesses and individuals.
"This is not a cancellation and the government remains committed to reintroducing this policy to ensure people working like employees but through their own limited company pay broadly the same tax as those employed directly."
Continue reading about Lords pack extra clout as Private Sector IR35 postponed
Ltd Co contractor optimum salary vs dividend split 2019/20
Posted by on May 21st, 2019 in Contracting Matters Blog
From the April 6, 2019, tax and dividend rates are changing. The changes affect how much of their income contractors can claim as salary to remain tax efficient.
Here are the optimum levels of the dividend/salary split for sole director limited company directors.
The basics: HMRC taxable income 2019/20
HMRC has outlined personal tax allowance for the forthcoming tax years in typically wordy fashion. Here's an at-a-glance table of what those allowances mean for all workers:Continue reading about Ltd Co contractor optimum salary vs dividend split 2019/20
Contractors’ most tax efficient salary and dividend levels, 2017/18
Posted by on May 16th, 2017 in Contracting Matters Blog
Here's our guide to limited company tax planning covering 06/04/2017–thru–05/04/2018. It highlights contractors' optimal salary and dividend levels split for tax year 2017/2018.
Storyboard:
- Introduction: defining the contractor role;
- (Roughly) how the payment vehicle works;
- This is how basic limited company tax efficiency works;
- Personal allowances for income tax, 2017/18;
- Taxes applicable to dividends for the 2017/18 tax year;
- Optimal salary for single- and multi-person payroll;
- Drawing dividends at higher tax bands: three safe steps you can take;
Continue reading about Contractors’ most tax efficient salary and dividend levels, 2017/18
Chancellor revokes contractors’ rights to decide payroll status
Posted by on April 7th, 2016 in Contracting Matters Blog
In the run-up to the budget, tabloids portended doom for contractors who work through a PSC. For those working off-payroll in the public sector, those harbinger headlines became reality.
The Chancellor announced that PSCs will have no say in how public sector clients pay them.
As of April 2017, it will be the client who decides if IR35 applies to an engagement.Continue reading about Chancellor revokes contractors’ rights to decide payroll status
2016 Budget Further Undermines Contractors Working Through PSCs
Posted by on March 18th, 2016 in Contracting Matters Blog
So, the Chancellor used yesterday's budget to continue his vendetta against contractors. In particular, he's targeting contractors operating through personal service companies.
The reason for this fresh assault on independent UK professionals? To curb tax avoidance.
Not that most contractors create a limited company to save on tax. But if they had their way, that's what the government and media would have you believe.Continue reading about 2016 Budget Further Undermines Contractors Working Through PSCs
Which is best for contractors, umbrella or limited company?
Posted by on April 14th, 2015 in Contracting Matters Blog
Should contractors work through an Umbrella or through their own Limited Company?
There are specific times when you'd consider an Umbrella more beneficial. But when it comes to applying for a mortgage, Limited is always better.
Becoming a Limited Company owner/director, you take on the mantle of a tangible business.
As such, in a mortgage lender's eyes, you're displaying intent, a long-term commitment.
Moreover, you've positioned yourself to run a contractor business in the most tax-efficient manner. A specialist underwriter will get that the minute they see your application. But getting your application before such an underwriter is often where most contractors' mortgage bids fail!Continue reading about Which is best for contractors, umbrella or limited company?
Why contractors choose Limited Company payment structures
Posted by on April 13th, 2015 in Contracting Matters Blog
Leaving permanent employment is a big decision for most people. Yet many do when they realise they can earn much more as an independent than as an employee.
Stormy, but often lucrative, waters of contracting or freelancing call to the intrepid adventurer. And the siren song of higher day rates is just too much of a temptation.
But before launching yourself into the deep, take a moment to consider your options.Continue reading about Why contractors choose Limited Company payment structures
Umbrella Companies – A Guide for Contractors
Posted by on April 9th, 2015 in Contracting Matters Blog
So. You've secured your first contract as an independent professional. You're with your recruitment agent, who says "Great. Now you need to find an umbrella company".
What does that mean, exactly?
Or you may not be quite at that stage. Instead, you're mulling over leaving your permanent role to take up a contract offer.
You're not quite sure what that will entail. So, now you're researching ways to operate as a contractor, umbrella companies being one such way.
To help you make the right decision, understanding why umbrella companies were born may help. Moreover, what their role is compared to other options open to you, especially after the latest IR35 reforms.
Clear as mud? Great. Let's go.Continue reading about Umbrella Companies – A Guide for Contractors
The Contractor Lifestyle: Does it Live Up to the Billing?
Posted by on March 31st, 2015 in Contracting Matters Blog
From outside the world of contracting looking in, rates contractors charge may seem steep. Especially those in IT and Oil and Gas.
But there are good reasons for those rates, which may yet get even higher after IR35 reform.
The question is, is contracting right for you? Can you cut it in a world of reduced job security and high income?Continue reading about The Contractor Lifestyle: Does it Live Up to the Billing?
Why should I take an IR35 test?
Posted by on January 30th, 2015 in Contracting Matters Blog
As a contractor, you may think that your contract is watertight. You may think there's no need to take an IR35 audit. Your agency told you your contract was 1000% HMRC safe. But don't bank on it! According to HMRC:
"There's no such thing as an IR35-proof contract"
No one can argue with that statement. Contractors can, however, be proactive.
You can submit your contract to an IR35 specialist for appraisal. Working together, you'll find ways to help establish that you’re not a disguised employee.Continue reading about Why should I take an IR35 test?
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