Up until less than a decade ago, permanent roles were arguably the most prominent way of working. However, contracting roles are becoming ever more popular and there are now estimated to be 600,000 contractors (operating via a limited company) in the UK.
There was a time when contractors couldn’t claim travel from work to home for a ‘temporary’ workplace. They were like any other permanent staff member – unable to claim back the cost of travel. Along came new legislation in 1998, which allowed travel to become claimable for contractors as long as the work place didn’t last any longer than 24 months.
It’s always great when you make a profit on a valuable item or asset. In accountancy terms this is called a ‘Capital Gain’. Tax is paid on the amount you ‘gain’ on the asset or item. depending on what it is you’re making a profit on and if the gain over the tax year is £11,000 or more.
Student loans are the one sore point of spending three plus years studying hard at University. Paying it back is also a drawn out process, with 9% of a permanent employee’s salary going to the student loan company once you earn over £16,910 (£21,000 if your course starts in September 2012).
We all need to eat, and buying it can be quite expensive, especially if you’re away from home.
We’re all about tax efficiency here at Churchill Knight. Umbrella or limited company options both have advantages; however the main reason for choosing to work as a contractor through a limited company is that the taxable benefits outweigh the simplicity of working through an umbrella company.
HMRC is well-known to have time-consuming and sometimes complicated forms that you are required to fill out as a limited company director. The P11D is one of these; essentially, a P11D reports the benefits paid out to a company’s employees. These items are known as ‘benefits in kind’ and as a contractor with a limited company, you may at some point need to fill out a P11D form.
Heckled and cat called throughout his hour long Budget announcement, the Chancellor George Osborne called this year’s budget “A budget for building a resilient economy.
Back up plans can be a valuable thing. Take Director’s Loans for example. Useful when running a limited company and can act as a handy back up. Most contractors might never need to use it, however, if you decide you need to take out money from your business account that exceeds how much you have, the money is then treated as a loan to the company.
Following a fraught and busy financial year, the overall assessment of how well Chancellor George Osborne has implemented his promises from the 2013 Budget is – not bad, could do better. Critics rounded on the government’s policy on borrowing for example, with the Shadow Chancellor, Ed Balls, calling the government’s stance as ‘borrowing for failure’.