Career Change? Think Contracting.

28th June 2018

There are many benefits over employment, writes Whiting & Partners Contract Specialist, Vanessa Pearson

 

Changing careers can be a challenge but leaving the employment wage treadmill to become a contractor can increase your earnings, saving on tax and national insurance as well as providing more flexible working hours.

Contractors are essentially self-employed individuals who work on projects for a set period of time or until a piece of work is completed.

When compared with wage-slaves, contractors can command higher pay rates and enjoy both the freedom and flexibility of choosing their projects and so take greater control of their careers.

There are important steps to follow and, frankly, this is where our help is often required.

First, research your proposed market to scope out the demand for your skills and to find out what rates are on offer. Typically, as a contractor you will then set up a limited company and benefit from taking a low salary, supplemented with dividends.

Once you have identified a contract, you will need to consider HM Customs & Revenue  legislation known as IR35 which determines if you are genuinely self-employed. We would review your contract to determine your tax status and then advise on how to improve the terms of the contract.

We regularly review HMRC tax cases to give the most up to date information. For example, HMRC recently lost a case based on the fact that the contractor was able to control how, when and where their work was done, and had no rights to holiday, sick pay or employment benefits. They were therefore proven to be self-employed.

Company tax benefits will apply too. These include claims for travel and subsistence costs plus other expenses. All will help to keep the company tax bill down. We have local specialists in contractor accounting who can help, advise and support your business.



 
Other items in Blogs
 
Lucy Bayliss
8th January 2020 It’s the final countdown!

There are only 23 days until the self-assessment tax return deadline of 31 January 2020. If your return is not filed electronically by this date, an automatic £100 penalty will be applied. Please note that the deadline for filing a paper tax return was 31 October 2019 and therefore all returns are required to be…

Read More »

Vanessa Pearson
13th December 2019 April 2020 Proposed IR35 changes: Status appeals process

As the planned changes to who determines IR35 status are fast approaching, contractors would be well advised to review their contracts on HMRC’s updated CEST (Check Employment Status for Tax) tool. Having provided answers to questions regarding substitution, control and nature of the work, the updated tool will give HMRC’s view of the workers employment…

Read More »

Ben Kilby
12th December 2019 VAT Surcharge

Have you or your business received one between 23 April 2018 and 31 January 2019?   If so, you may want to check if it has been dated. If it has not been dated you may be in for a refund. Any surcharge liability notice or surcharge liability notice extensions are invalid if they have…

Read More »

Lucy Bayliss
25th November 2019 Don’t let your tax bill affect your festive joy. Instead, spread your tax payments throughout the year!

With the festive period fast approaching, it is easy to lose sight of your self-assessment tax return!   If you are employed or receiving a pension and you file your return before 30 December 2019, you can elect to have your tax collected through ‘Pay As You Earn’ (PAYE) rather than paying one lump sum…

Read More »

Ian Piper
22nd November 2019 2019 Growth: Missing in action?

(Data Source) As another year draws to a close, local SME businesses will be forgiven for looking forward to drawing a line under it. With 2019 sales growth barely nudging 1%, it has been a year of focusing on not slipping backwards, rather than the usual mantra of continually signing up new accounts.  When commentators…

Read More »

Mark Burrows
21st November 2019 Avoiding Self Assessment Tax Scams

HM Revenue & Customs have reminded Self Assessment taxpayers to watch out for fraudsters as the tax return filing deadline of 31 January approaches.   HMRC say they have received nearly 900,000 reports of suspicious phone calls, texts or e-mails from scammers pretending to be the tax authority.  Most of these messages were about fake…

Read More »