Whatever your reasons for contracting, whether it’s your first contracting position, or you’re a seasoned contracting pro, Recruit 12 has the experience and expertise to help you. In today’s marketplace contract work can offer you the opportunity to advance your career in a flexible way that is more suited to your personal circumstances.
There are two options when Contracting. You can operate via a Limited Company or you can work through an Umbrella Company - who become responsible for some of your administration including deducting your tax and national insurance.
This is most often the best option for professionals who are intending to contract on a longer-term basis and who are genuinely self-employed and fully compliant in terms of IR35.
IR35 is tax legislation that came into effect in April 2000. The aim of the legislation is to eliminate the avoidance of tax and national insurance contributions through the use of intermediaries such as personal services companies (PSC’s) or partnerships, where an individual worker is not genuinely self-employed.
If you provide your services to an end Client through a limited company (an intermediary) then you have to fully consider IR35 for every contract you undertake.
A limited company contractor who genuinely falls outside of IR35 rules would usually take a smaller salary with the balance paid via dividends instead of salary.
If your limited company contract does fall within the scope of IR35 you can still claim travelling and accommodation expenses in certain cases, benefit from the VAT flat rate scheme and receive interest on the funds held within your limited company, but most of the income from that contract will be deemed taxable income and subject to PAYE and national insurance contributions.
The second option for contractors is to opt to work via an Umbrella company rather than setting up their own Limited Company. There are a number of benefits available to you when working this way, including:
Tax and NI are deducted (and paid) on your behalf
Some business-related expenses can be recovered subject to the recently announced Travel and Subsistence (T & S) guidance announced by HMRC
The umbrella takes responsibility for some of the administration of the contract
The umbrella can also offer advice and support on rules and statute
Recruit 12 can point you in the direction of the best advice regarding IR35 and other matters should you opt to take the Limited Company route. We work closely with a number of Accountancy (Limited Company) and Umbrella specialists and can provide a list of options of TEAM compliant providers.