Contractors Accounting
UK contractors and freelancers face unique tax challenges including IR35 off-payroll working rules (determining employment status for tax purposes), choosing between operating through a limited company (PSC) or umbrella company, dividend vs salary extraction planning, and the loan charge provisions. Contractors must also manage expenses claims, VAT registration decisions, and Corporation Tax obligations.
Our contractor accounting services include IR35 status determination support, limited company formation and management, tax-efficient salary and dividend planning, allowable expense guidance (including travel, home office, and professional subscriptions), VAT Flat Rate Scheme assessment, Corporation Tax return preparation, and director's Self Assessment filing.
What's Included
Comprehensive services tailored to your industry needs
Industry-Specific UK Expertise
Key UK Challenges
Complexities you face
- Determining IR35 status — inside IR35 (taxed as employee) vs outside IR35 (taxed as self-employed)
- Understanding who is responsible for IR35 determination — public sector and medium/large private sector clients
- Optimising salary and dividend mix to minimise combined Corporation Tax, Income Tax, and NIC
- Navigating the loan charge — HMRC pursuit of disguised remuneration schemes
- Claiming allowable expenses correctly — 24-month rule for travel, home office costs, professional subscriptions
- Deciding between limited company (PSC), umbrella company, or sole trader status
Tax Considerations
HMRC rules & reliefs
- IR35 — inside IR35 contracts taxed via PAYE with employer NIC at 13.8% and employee NIC at 8%
- Corporation Tax — 25% on PSC profits (19% effective via marginal relief for profits under £50,000)
- Dividends — taxed at 8.75% (basic), 33.75% (higher), 39.35% (additional) above £1,000 allowance
- Optimal salary — typically set at NIC primary threshold (£12,570) to preserve State Pension entitlement
- VAT Flat Rate Scheme — potentially beneficial for contractors with low costs (limited cost trader test applies)
- Employment Allowance — £5,000 employer NIC reduction not available for single-director companies
How We Help
Our tailored solutions
- IR35 contract reviews and status determination support with written assessments
- Company formation, registered office, and company secretarial services
- Monthly payroll processing with optimal salary/dividend extraction strategy
- Quarterly VAT returns — standard scheme or Flat Rate Scheme as appropriate
- Annual Corporation Tax return (CT600) preparation and filing
- Director's Self Assessment return with dividend and expense claims
Ready to Simplify Your Contractors Finances?
Get a free consultation with our industry specialists and discover how we can help your business thrive.
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