Being Sure of Your Status: Checking IR35 With an Umbrella ...

Written on April 3, 2012 by admin

There are a massive range of benefits to attaching yourself to an umbrella company to over see and mediate your work when you are contracted to an employer, for example, reducing your tax bill in a wholly legal and honest manner . If you?re self employed but contracted to one major business, you may need to consider mediating your work through an umbrella company?s books. In order to ascertain properly whether this decision is the most appropriate choice for your circumstances, you may initially decide to be positive of two things: will you be net better off if you set up an umbrella company, and can you do this without getting on the wrong side of the tax man ? To answer these two pretty vital questions you ought to use an umbrella calculator and ensure you have a thorough understanding of IR35.

An umbrella calculator is a web-based item of software, usually found on the websites of umbrella companies for ?hire?, that allows the user to enter his or her own financial data and a range of other factors, such as their hourly rate, amount of billable hours they usually work and regular expenses , for example overnight accommodation and subsistence when travelling on business. Other variables you might put into an umbrella calculator will include business mileage and any other genuine business expenses. The function of an umbrella calculator is to take these various inputted data and use them to get an understanding of whether a person will be financially better off working for an umbrella company or under contract as a self employed person. The Umbrella calculatorchecks all of the variables against the tax system and calculates a possible saving should the applicant choose the umbrella company option.

Over and above using an umbrella calculator, you should ensure you have a comprehensive grasp of and are totally compliant with IR35. IR35 is the name of a piece of UK legislation issued to ensure that people set up to be hired by an umbrella company do not get an unreasonable advantage from their change in situation. IR35 was issued in 1999, prior to which time people employed by an umbrella company could without fear of punitive action take their income as company profits, which were exempt from National Insurance payments. IR35 also acted to counter an umbrella company from being shared by different members of the same family, such that all of the owners could benefit from distributing the company?s income across each owner?s lower income tax band and personal allowances, so as to reduce their tax bill to the point of avoidance. Although it has been subject to regular consideration and review by various governments, IR35 is still intact and also is pretty much unchanged since its issue.

Posted in Finance

If you enjoyed this post Subscribe to our feed

stoudemire adrianne curry adam levine hoekstra best superbowl commercials 2012 best super bowl ads chrysler super bowl commercial