Contracting Matters Blog
Posted by May 21st, 2019on
From the 6th April 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
Posted by May 16th, 2017on
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.
- 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
Posted by April 7th, 2016on
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
Posted by March 18th, 2016on
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
Posted by April 14th, 2015on
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, you’re displaying intent, a long term commitment, in a mortgage lender’s eyes.
Moreover, you’ve positioned yourself to run a contractor business in the most tax-efficient manner.
Let’s make no bones: I’m not talking small change here. If you earn £30k+ per annum, the benefit of limited company deductions far outweigh those of an Umbrella.
Continue reading about Which is best for contractors, umbrella or limited company?
Posted by April 13th, 2015on
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 psiren-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.
In particular, you need to think about your new business.
What’s the best way to minimise your long term tax liabilities?
How, at the same time, can you maximise your income?
Who’s going to work out what you can claim as tax relief and what you can’t?
And how can you juggle it all to make it easy for your customers to deal with you?
Continue reading about Why contractors choose Limited Company payment structures
Posted by April 9th, 2015on
So. You’ve secured your first contract. You’re with your recruitment agent, who says “Great. Now you need to find an umbrella company“.
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. Now you’re researching ways to operate, umbrella companies being one such way.
To help you make the right decision, you need to know why umbrella companies were born. Moreover, what their role is today amongst the options open to you. Let’s go.
Continue reading about Umbrella Companies – A Guide for Contractors
Posted by March 31st, 2015on
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?
Posted by January 30th, 2015on
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?
Posted by January 22nd, 2015on
IR35, or intermediaries legislation to give it its proper name, is still here. And the signs are it’s encroaching on all walks of contracting life.
First, the decision of whether you’re working “inside” IR35 went to the public sector to decide. In the upcoming IR35 Reform (April 2020), the same decision-making process is going to the private sector.
Already, many banks have put a stop to hiring contractors post-reform. Rather than taking the responsibility of deciding, those who’ve opted out have taken what many see as the ‘easy’ way out.
So, what can you do? Is limited company and umbrella contracting dead?
Continue reading about 5 Simple Steps You Can Take To Improve Your IR35 Status