Or will 2017 be the year when you make the ultimate move?
See our TOP 10 planning tips. See more on How we can help you?
Trade via a Limited Company
Working through your own Limited Company is still the most tax efficient way which also ensures maximisation of the disposal income.
Please also see Limited V Umbrella
Register your company for VAT on the flat rate scheme
You have to register for VAT if your turnover is greater than £83,000. Being on a Flat Rate Scheme could possibly save you some tax! Even though the benefits of being in Flat Rate Scheme are to be restricted from April 2017, this could still be beneficial for a lot of Freelancers.
Get the MIX right – Salary & Dividends
We recommend that you pay yourself a minimum salary covering your personal allowance. On top of this, you could remunerate yourself via dividends from the company’s profits after tax. Individuals are taxed on dividends received in excess of £5,000 hence time your dividend extraction and plan your personal tax liabilities.
Claim your business expenses
There are various expenses contractors/freelancers can claim. By claiming relevant business expenses through your company you save tax @ 20% which is the current rate of corporation tax. Please note that there are strict rules on expenses and carelessness or ignorance does not bode well with the tax authorities.
Structure & shareholding
Splitting the ownership of your company with a non-earning spouse can reduce the tax you pay, perhaps keeping you out of the 40% tax-bracket altogether.
Claim the Employers National Insurance Allowance
Employers are subject to Class 1 national insurance however they also get an employment allowance if they meet certain conditions.
AIA on capital assets
If you buy items such as laptops, hardware, fixture and furniture for your office your company can claim what is known as a first year capital allowance that provides tax relief in the year of purchase.
Ensure you comply with IR35 rules
IR35 is an anti avoidance tax legislation that assesses contractors & freelancers based on the substance of their working arrangements. Being caught inside of IR35 can defeat the object of running your business through a Limited Company. IR35 is assessed on a contract by contract basis.
Submit your data and files on time
You must always submit your data and VAT returns on time. Late filing of information with HMRC and/or Companies House can result in penalties and interest.
This is available to Contractors & Freelancers who are selling or closing down their business and hence their Limited Companies. Once all tax-efficient ways have been utilised, entrepreneurs relief can be applied to any remaining funds in the company, taxed at only 10%, if all relevant conditions are met. Services of an Insolvency Practitioner may also be needed.
How can we help?
- The packages we offer to Contractors & Freelancers include tailored tax advise for the company as well as themselves as individuals.
- We will form your Limited Company and get it registered for all relevant taxes.
- We will look after your bookkeeping and administer your payroll.
- We will prepare and submit your quarterly VAT returns based on the information you provide us.
- We will prepare and submit your company’s annual accounts to HMRC and Companies House.
- We can submit you annual confirmation of statement to the Companies House.
- We will prepare and submit personal tax returns for the Director and if needed for other shareholders too.