Contracting

Contractors tend to have a slightly different setup to most business owners as they are the sole income providers and may have multiple income from different contracts whether working publicly or privately, inside or outside of IR35. Receiving on-going specialist advice on each contract can provide huge benefits as it allows a clear understanding of their income enabling tax planning with professional advice specific to them.

Contractor Specialists

Contractors falling inside of IR35 legislation has risen dramatically over the past years many deemed to fall inside IR35 not seeking further professional advice. In addition to that, contractors falling within IR35 are assuming it is tax efficient to trade through an umbrella when this case is almost never true. In most cases a limited company is the best route of option. Online software can assist In keeping accountancy fees down.

To follow legislation, assuming employment has not been taken up, tax may be deducted in advance of payment or via an umbrella company. Individuals can benefit from contracting through a limited company and where required, completing payroll requirements internally. The cost of an umbrella company usually reduces the benefit of an umbrella company therefore it could benefit individuals to complete IR35 payroll in-house and receive advice where all matters are considered exceptionally.

With recent changes, it seems that a lot of businesses and individuals are paying more tax than required on income received along with incurring higher costs throughout their business duration with each client. Projects and/or locations can help assist contractors manage contracts IR35 status’ and benefit IR35 tax efficiency.

IR35 Legislation

IR35 legislation states that when an individual falls inside lR35, they must pay tax on income through a PAYE scheme as an employee would. Directors working as a consultant deemed inside IR35 had to ensure income was taxed correctly through a PAYE scheme.

As more changes have been applied it is common to see that people turn to other methods of tax such as umbrella companies or employment rather than seeing tax advice on the different options available to them.