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info@commonwealthcontractors.comIf you run a Contractor Limited Company it is a good idea to know about Capital Gains Tax and Entrepreneurs Relief. Are you a highly skilled expat Contractor? Would you like to maximise your contract income and work towards a visa extension or visa transfer? If so Commonwealth Contractors can help! To discuss your situation […]
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Life would be far simpler if dividend Income was subject to tax at the same rate as earned income, and you got a personal tax credit for the corporation tax paid by the company before it declared your dividend. Unfortunately, this is not how it works. Instead dividends are taxed at a lower rate than […]
As a Contractor you need to pay Income Tax on (1) PAYE earnings received via an Umbrella Company, OR (2) on Salary and Dividends received via your own Contractor Limited Company.
An IR35 Investigation is a Contractor’s worst nightmare. The HM Revenue and Customs may take months going over company records, assessing service contracts, speaking to client representatives and going in detail through financial transactions.
If a contract you’re working on is considered to be Inside IR35 you must pay full Income Tax and Class 1 National Insurance deductions (Employers and Employees) on salary payments made throughout the year.
If your Contract is Outside IR35 you have freedom to claim many more business related expenses than if your contract were Inside IR35. Claiming expenses is a great way to reduce your Income Tax & National Insurance liability.
IR35 Status is not solely dependent upon contract terms and conditions. Actual ‘working arrangements’ are now one of the most important factors in determining whether someone is or is not caught by IR35.
Aside from the main factors (Right of Control, Substitution and Mutuality of Obligation) there are a number of other contract factors that should be addressed before an agreement is signed.
It is important to retain the contractual ability to provide a Substitute, even if you never actually provide a substitute in practice!
Mutuality of Obligation is a key point in an IR35 contract. If a ‘Mutuality of Obligation’ exists you will certainly be Inside IR35. Therefore it’s very important that they agreement if for a fixed period after which time both parties go their own way.