SJD Accountancy release Contractor Tax Tips to help freelancers survive the recession
The economic climate, although bottoming out, is still tough for contractors. With this in mind, SJD have created their recession-busting tax tips to help contractors maximize on their earnings!
- Go limited – recruiters generally advise new contractors on working through an umbrella company, selling it as the simplest option. Whilst true, contractors are missing out on a lot of their hard earned cash through this option – on £350 a day they could be earning and additional £15,000 a year through a limited company.
- Save on NI payments – through a flat rate VAT scheme (only available if the contractor owns a limited company) they could be earning over £2000 a year on a £350 a day salary
- Knowing contractor expenses – many contractors miss out on claiming crucial expenses that could save them thousands of pounds
- Keep the tax man happy – there are hidden charges for contractors who don’t get their taxes paid on time – for smaller companies and freelancers £300 is quite a chunk!
- Tax planning – limited uses for sole traders but very useful for contractors
- Government relief – contractors can be eligible for special government schemes which can reduce tax liability to 10%
- Contractor experts – many accounting firms aren’t aware of some of the special tax schemes that apply to contractors as they are not specialists. Contractors would be much better off working with a specialist contractor accountant
- Pensions – through setting up a pension, contractors can gain tax relief as well as use up some of the remaining funds in a very tax efficient way
- Child care vouchers – directors of companies and their secretaries could save up to £450 through government child care vouchers
- Separate bank accounts – contractors should move money out of their current accounts and into a high interest saving account when the balance is high. This can provide exceptional rates of return that could make all the difference
SJD hope that these small tips will help contractors through this tricky economic situation – times are tough and acting on even one of these could make all the difference!