If you’re an IT professional thinking about contracting, our easy-to-understand IT contractor tax guide will help you make sense of how taxes work for contractors.
Contracting via umbrella company is widely considered as being the easiest method for contractors and freelancers to get paid. There is less of an administrative burden than operating through a limited company and getting paid is a quick and efficient process. We are regularly asked about umbrella company payroll by contract and freelance workers. Here are the answers to the most common queries, including ‘what is an umbrella company?’
Contractors working through umbrella companies were hit hard by changes in legislation concerning claiming expenses. Starting on the 6th April 2016, HMRC introduced legislation that significantly reduced the number of contractors able to claim tax relief on travel and subsistence expenses. In fact, contractors are automatically not considered for expense claims, unless they can prove they are entitled to them. Nevertheless, working through an umbrella company remains a popular choice for contractors and freelancers, especially those working in the public sector.
Many people who either are looking to start their own business, or are a contractor or freelancer looking for a payroll solution, hear that limited companies are a tax-efficient way to operate in the UK. But with all the confusing jargon surrounding it, what is a limited company really and how can operating one benefit you?
Demand for umbrella companies appeared to be in decline after the removal of Travel and Subsistence expenses for a majority of contractors by HMRC in April 2016. However, with new legislative changes affecting off-payroll contractors in the public sector, commencing 6 April 2017, the demand for umbrella companies is on the rise again. Are you aware of the benefits available to contractors working through an umbrella company?