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We work with thousands of contractors across the UK to help them with CIS tax returns, IR35 advice & support, company incorporation, umbrella companies, tax planning, expense management, and so much more.
Our team of contractor specialists love supporting our contractor clients. We’re accredited by respected contractor associations including FCSA and Contractor UK and we’ve been shortlisted for many contractor awards as well as being highly commended in the Contracting Awards 2020.
BOOK A CALL BACK IR35Here at dns we support and advise thousands of landlords with all their accountancy, tax and landlord needs.
Our specialist contractors team offer a full range of services for all your contracting needs.
We support and advise thousands of people just like you across the UK and abroad
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All your accounting needs in one place. Online leading software and in person with our friendly team.
Helping you navigate the complex rules around IR35
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As a contractor it is imperative you are aware of IR35 legislation, what it entails and the risks involved. Even if you are relatively new to contracting, you should not ignore IR35, as it affects everyone in the contracting business. In a Nutshell, IR35 legislation tries to tax your company income as employment income meaning that all the tax advantages gained are almost lost.
IR35 affects contractors working through a limited company. The Intermediaries Legislation (IR35) came into force in April 2000 and was designed to deal with “disguised employees”, individuals that the government believed were taking advantage of corporate structures when they should have been taxed under employment as any other employee. The rules only apply to "relevant engagements", that is, where an individual provides services to a client through an intermediary (a limited company) and, but for the existence of the intermediary, the income would be treated as that of an employee if the individual had contracted directly with the client.
All the income earned is treated as employment income and therefore the tax advantage is lost. It was intended that IR35 legislation would ensure compliance with tax law so that apart from specified deductions, all money received by the intermediary in respect of relevant engagements would subject the individual to Schedule E Income Tax and Class 1 National Insurance, thus all dividend payments and many business expenses were not allowed.
To determine whether you are inside IR35 or outside IR35 there are three main tests to establish employment status:
there are many other factors:
When the facts have been established it is appropriate to look at the overall picture: whether it indicates a person in business or one working as an employee. if the evidence is evenly balanced the intention of the parties may then decide the issue.
Having looked at a number of standard agency contracts hmrc has, as expected, suggested that such contracts fail ir35. hmrc will consider only whether specific contracts fail the test and will not give any clearance on standard contracts.
The conclusion, bearing in mind all that is written above, is that if you sign a standard agency contract you are likely to fail ir35 even if you have the contract reworded. hmrc will look at the facts behind the contract. so be warned and beware. Also have information regarding what expenses you can claim when inside ir35.
Being an employee, director and shareholder of your own company you get paid three elements on a monthly basis.
VAT Registration is optional if your turnover is less than £70,000. If your Turnover exceeds £70,000 then VAT registration is mandatory.
VAT may mean additional work for your company, but it is often worth it, as you could save on average £2,000 per year on VAT. With DNS at your side, VAT registration and quarterly VAT returns need cause you no bother whatever.
For Small businesses with a turnover of less than £150,000 you can join the Flat Rate scheme, which allows you to collect VAT at the full standard rate, while paying at a lesser rate.
For Example if you make sales of £10,000 and collect VAT of £2,000, you could save around £300 to £400 depending on your trade classification.
VAT Registration for Contractors provides additional income, so why miss out?
Some common expenses include the following, but remember you must keep all receipts and have all of them to hand for audit if necessary:
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