Employed or self employed - that is the question.....
Do you work as a sub-contractor, either through your own limited company or a management company? You may not realise that this COULD make you an employee and subject to PAYE and national insurance in the same way as those employed directly by your client.
This means you lose the tax benefits you are entitled to as a self employed worker, which, lets face it, make being self employed attractive in ...the first place!
In April 2000 HMRC introduced their anti-avoidance legislation known as IR35 which was designed to catch individuals who would be employees if the 'intermediary' (i.e. limited company, or managed service company) was not there.
This basically means that if you act like an employee i.e.
- can't choose your own hours or place of work
- are not autonomous in your work
- bear no risk of financial loss
then you probably should be paying tax like an employee.
Like so many things, it's not always straightforward and your accountant can advise you on whether a contract you've entered into is likely to fall under this legislation.
If you're worried about this or would like some more information then please get in touch and we'd be happy to help.
ICAEW Business Advice Service
We are pleased to be associated with the ICAEW Business Advice Service, offering a free initial consultation to small businesses and those just starting out.
There are lots of great resources available to you so please check out the website using the link below or contact us for more information.
More money in your pocket with tax rebates for employees
Did you know that you can file a self assessment tax return even if you're an employee of a company. Many people, especially those in the construction and building industry are paying for items from their own pocket that could be used as tax deductible expenses and generate a refund on the tax they have already paid.
Check back here in a while for a factsheet which could help determine if you're one of those people, after all, it's your money!
LLP Finance Services will provide you with tailor made accounting and tax solutions for your business and specific needs. Chartered Accountants with a wealth of financial services experience across many different industries, we are here to help you make your business as great as you are. From self assessment tax returns and accounts to a complete business planning service, we have everything you need in one place.