A&C Chartered Accountants is helping hundreds of contractors, just like you, to optimise your accounting, business and earnings during the government changes clamping down on the use of umbrella companies.
Let A&C Chartered Accountants – the full service accountancy firm assist you move your contractor business to the cloud with greater, streamlined financial control. There is no need to panic when moving away from an umbrella setup any longer.
Our experienced team of chartered accountants is dedicated to managing your accounts, minimising your tax AND providing expert business advice. Contact us for complete umbrella company migration support today.
Where many contractors go into business and set up a traditional ltd company, there has been a considerable rise over previous years of contractors opting to work through an umbrella company in their business affairs to match their goals and expectations from business.
What has previously been a massive challenge to the one man contractor business, even with a good and reliable accountant, is the daunting prospect of handling paperwork, tax, national insurance contributions and PAYE. While those excuses are redundant with a true online accounting solution such as A&C Chartered Accountants who specialise in contractor accounting specifically, many contractors instead opt to use an Umbrella Company. Some benefit of an umbrella company could be to save start up and set up fees, as well as fees to shut down a ltd company should that situation arise. That can of course be a benefit if you’re planning to run as a contractor for a short period of time, or, you’re trialling work/life as a contractor for the first time.
IR35 – the facts and what you need to know about legislation changes
Intermediaries legislation (known as IR35) is the tax and National Insurance contributions legislation that may apply if you’re working for a client through an intermediary.
If IR35 applies, all payments to the intermediary are treated as your employment income and the intermediary must pay any tax and National Insurance contributions due. It ensures that you pay roughly the same amount of tax and National Insurance contributions as if you’d been directly employed by the client.
The intermediary is always responsible for ensuring compliance with the IR35 legislation when it applies. As a director of your limited company or a member of your partnership, you must ensure compliance with all relevant legislation, and take responsibility for determining whether IR35 applies for each of your engagements or not.
There can be significant consequences of ignoring IR35 legislation. Interest and penalties may be charged on any additional tax and National Insurance contributions due as a result of an HM Revenue and Customs (HMRC) enquiry into your situation.
For these very reasons, many contractors have opted to work through an umbrella company specifically to disguise their tax and NI obligations.
If you feel your current umbrella set-up will no longer be optimal for your business, or, you’re simply unsure about the upcoming changes – then feel free to contact one of our specialist accountants.
April 2016 Onwards – The Death Of Umbrella Companies For Contractors?
With latest government tax rule updates and changes, it is becoming less and less beneficial to work as a contractor through an umbrella company. Post 2016, new services offered by Umbrella Companies will be a much less secure arrangement, involving zero hour contracts and even NO contracts at all…
Original umrella company tactics were to ensure maximum tax relief on travel costs and subsistence costs. HMRC is poised to be changing all of this in 2016. With the T & S Legislation going through as proposed (due to apply from April 2016, the restriction will net £635m over four years), it is becoming obvious more and more that the government are taking those small steps closer and closer to the goal of making expense claims for contractors via umbrella companies harder to put through, and much more uncomfortable.
In short, tax relief on your expenses as an umbrella contractor will no longer be given at source; it will soon have to be claimed at the end of the tax year in a self-assessment tax return.
Found at section 289A of the Finance Act, the clause will be in force for the 2016-17 tax year. It effectively states that for reimbursed expenses which are allowable expenses, no tax liability arises as long as the reimbursement is NOT made by virtue of a salary-sacrifice arrangement and that the tests imposed by Section 336 ITEPA 2003 have been undertaken by the payer or employer.
But an amendment to Section 289E of the Act, on salary sacrifice arrangements which also applies to the 2016-17 tax year, states: “In this section ‘arrangements’ includes any scheme, transaction or series of transactions, agreement or understanding, whether or not legally enforceable.” – source ContractorUK
Is It Time To Speak To A Qualified Accountant?
If you are a contractor, and you have been accustomed to working via and through an umbrella company to date and are seeking advice on how to proceed into 2016 with your business and tax affairs contact us now.
Here at A&C Chartered Accountants we can offer a risk free, cost effective accounting solution, that will take the flexibility and streamlined approach of an umbrella company, by using specialised cloud based real time accounting software via our team of specialised accountants to service your needs and business.