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Office Hours: 9am to 5.30pm

Inside and Outside IR35 – What You Need To Know

IR35 was introduced by HM Revenue and Customs (HMRC), established to combat tax avoidance in the provision of personal services. Following this, the definition of self-employment was outlined. This way, disguised employees couldn’t take advantage of the tax benefits of self-employment. However, those who falsely identify as self-employed also enjoy the security of being a permanent employee.

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Sole traders and IR35

If you are a sole trader working as a contractor for a company, it’s vitally important to be aware of the rules surrounding IR35. IR35 was first introduced by HMRC around the turn of the millennium and was designed to clamp down on tax avoidance.

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Accelerated Payment Notice: What is it?

Accelerated Payment Notices were first introduced in 2014 and have since been used by HMRC in order to recover billions of pounds of taxes. The notice states that HMRC believes that the recipient has willingly partaken in a tax avoidance scheme and therefore are required to pay the amount that has been wrongfully avoided within a 90-day period.

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Sole Trader vs. Ltd Company

If you run your own business, it’s inevitable that you’re going to be faced with the decision of whether you want to trade as a sole trader or limited company. Which is best for your circumstances? Here’s a quick summary of the main differences between trading as a sole trader or a limited company.

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UK Corporation Tax 2018

At One Click, we can provide you with accurate, valuable and in-depth advice on reducing your tax liabilities whilst remaining wholly compliant with HMRC legislation. The corporation tax rate for businesses operating in the UK is set at 19%, though it will be reduced to 17% in 2020. Companies in the UK are tasked with estimating their own tax liabilities and paying them by the due date. The due date is nine months and a day after the end of a company’s accounting period in most cases. Tax returns must be filed with HMRC within a year of your company’s year-end. 

 

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IR35 cost

If you are outside IR35, you would typically take a small salary from your company which will allow you to benefit from statutory payments whilst minimising the amount of Employer’s and Employee’s National insurance and tax. The rest of the income you take from the company would be paid in the form of dividends which come out of the company’s post-tax profits.

The advantage of this is that dividends do not attract National Insurance and are taxed under the Corporation Tax regime.

If however you are caught by IR35 on an engagement then the majority of your income would be treated as “deemed salary” and subject to the same levels of taxation as a normal employee. There may still be some benefits of working via a limited company even if IR35 caught such as flat rate VAT and certain expense allowances but the financial advantages are less.

Impact of Brexit on VAT, balance of trade and growth: what recent data suggest

Britain are due to leave the EU when Big Ben bongs at Midnight on 29th March 2019. This will be a pivotal moment for the history books, and one at least 48% of the voting population did not wish to witness. The British people would have waited nearly three years for this event, following the vote, so understandably the UK will be weary of the whole thing by then.

Brexit will impact us all in some way but the flexibility of being your own boss (as a Company Director), and the tax benefits of working through your own Limited Company; with up to date advice from our Accountants or the option to work through our Umbrella PAYE services, allows you to keep your options open and has never been easier, with our friendly, efficient and cost-saving services.

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Corporation Tax Rates: comparing UK against the other G7 members

Global economy

With the world now being considered a global economy, we are often tempted to compare ourselves to other nations and take a cursory glance at least, at how they run their tax systems and execute their political agendas. Not only does this give us ideas, but can make us feel smug and envious in equal measure. Historically we felt closer to our European neighbours, not only culturally but financially.

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Budget announcement March 2017

Philip Hammond stated to the House of Commons in his first Budget speech that the £5,000 Dividend tax allowance, introduced only a year ago was “very generous”. True, it is more generous than the new allowance of £2,000, set to be introduced from 6th April 2018. Shareholders and Company Directors can rest easy then that the new dividend threshold, which Limited Company Accountants and Personal Tax Advisers have only just begun to get used to, will last another year!

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