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Specialist accountants for Limited company contractors and freelancers

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PEP16 Small Practice

By PaperRocket Accounting, Aug 17 2017 05:00AM

There are now more people than ever before deciding to join the contracting world and when you consider the numerous benefits associated with this method of working it’s no surprise to see why!


As a contractor you will have a lot more freedom and flexibility, gain a wealth of skills and experience by working for various clients in different industries and you will have the opportunity to potentially earn more than a permanent worker in the same role.


There are of course some challenges that you may come across by being your own boss, with one of the main ones being that you will not be entitled to the same benefits as a ‘permie’ worker, such as holiday and sick pay.


Although this may be a concern to many people who are deciding whether they want to take the leap into self-employment, you can cut some of the risk by ensuring you are organised enough to work around the issue.



Managing your cashflow when taking holiday


If at all possible, try to plan your time off as you would if you were a permanent worker by giving yourself a set amount of weeks that you will use as holiday.


By doing this you can then calculate a rough estimate of how much you could potentially earn on an annual basis and then ensure you budget to make up for the loss of earnings while you’re not working.


When it comes to taking time off remember to keep your clients in the loop by giving them at least a month’s notice if possible and try to complete any outstanding projects that you have promised to them. It may also be worth finding out if they need you to carry out any extra work before you go away.


This is a great way of showing clients how reliable and professional you are – which will hopefully result in them having more trust in you and your work so that they are more likely to want to use your services again.



Unrestricted holiday


One of the best things about taking holiday as a contractor is that you are able to take as much time off as you want – unpaid of course, but you are in control of when and how long you have holiday.


There will be certain factors to take into consideration – for example, should you only be working a short contract for a client (a month or less), it’s probably best to avoid taking holiday during this period. First of all the client might not be happy with you taking time off because you are on such a short contract as it is and there’s the fact that showing your full potential over a longer period of time may even help with securing future projects.


Plus, if it’s the only contract you have on at the time you know that you’ll definitely be earning – many contractors will look to book holidays while they are in between contracts instead of turning away work, so that they can maximise their earning potential during the year.



PaperRocket Accounting provide accounting and tax services to professional limited company contractors and freelancers working in the UK.


We offer our clients a choice of four all-inclusive fixed fee monthly packages which cover all of their accounting and tax needs (so no hidden costs or surprise bills!). All of our accounting packages include a monthly subscription for a cloud accounting software subscription provided by the awarding winning FreeAgent.


Each of our clients is given their own dedicated qualified accountant with unlimited access in person, telephone, or by email.


We pride ourselves on our client satisfaction and customer service and were shortlisted as 'Small Practice of the Year 2016' in the AccountingWEB practice excellence awards, as well as FSB Hertfordshire Service Excellence finalists in 2015 and 2016.


To find out how we can help you please get in touch now.




By PaperRocket Accounting, Aug 15 2017 06:00AM

As a limited company contractor you will be entitled to a number of benefits, including being able to claim back on expenses made for the running of you business.


As your company will not be taxed on items and purchases that have been made for the running of the business, contractor expenses can reduce your tax bill at the end of each year.


The most common types of expenses include:


• Travel (whether this is for public or private transport)

• The rent, heating and lighting of an office used by your company

• Any office items, such as stationary, printing cartridges, computers and software

• Business phone bills

• Accountancy fees


Contractors might not be aware that it is also possible to claim back on annual events, such as a staff summer party, just as long as certain conditions are met.


For example:


• You will need to ensure that the cost of each person does not exceed £150 – going above this amount will mean that any costs are then subject to tax and national Insurance Contributions.


• If you wish to include your employees’ partners with these events, you can still claim tax relief, just as long as the total figure does not exceed £150 per member of staff attending.


• Every member of staff must be invited to the event in order for you to be able to claim back on the expense. You are also able to offer separate parties for different departments, as long as all of your employees can attend one of them.



Can I have more than one annual event?


In short, yes this is possible – many firms will choose to hold a Christmas party too, you will just need to ensure that the £150 per head mentioned previously is the maximum amount you spend annually.


The HMRC websites explains:


‘If the employer provides two or more annual parties or functions, no charge arises in respect of the party, or parties, for which cost(s) per head do not exceed £150 in aggregate.


‘Where there is more than one annual function potentially within the exemption, we do not expect employers to keep a cumulative record, employee by employee, of functions attended. But for each function the cost per head should be calculated.’

It adds:


‘The cost per head of subsequent functions should be added. If the total cost per head goes over £150 then whichever functions best utilise the £150 are exempt, the others taxable’.


An example of a situation such as this would be if you were to hold two events and one ended up being £100 per head, the other £75.


Although this is just £25 over the limit, HMRC would deem the lower figure as being a fully taxable benefit – meaning that the £110 event would be covered by the exemption, whereas the full £75 for the second occasion would be taxed as a benefit in kind instead.



PaperRocket Accounting provide accounting and tax services to professional limited company contractors and freelancers working in the UK.


We offer our clients a choice of four all-inclusive fixed fee monthly packages which cover all of their accounting and tax needs (so no hidden costs or surprise bills!). All of our accounting packages include a monthly subscription for a cloud accounting software subscription provided by the awarding winning FreeAgent.


Each of our clients is given their own dedicated qualified accountant with unlimited access in person, telephone, or by email.


We pride ourselves on our client satisfaction and customer service and were shortlisted as 'Small Practice of the Year 2016' in the AccountingWEB practice excellence awards, as well as FSB Hertfordshire Service Excellence finalists in 2015 and 2016.


To find out how we can help you please get in touch now.




By PaperRocket Accounting, Aug 10 2017 05:00AM

Last year, it was revealed that by April 2018 it would be compulsory that all businesses and individual taxpayers would need to register, file, pay and update their tax information digitally.


The government’s ‘Making Tax Digital’ plans mean that eventually HMRC will move to a fully digital tax system where:


• Bureaucratic form-filling is eradicated — taxpayers should never have to tell HMRC information it already knows;


• Unnecessary time delays are eliminated — the tax system operates much more closely to ‘real time’, keeping everyone up to date and removing the risk of missed deadlines, unnecessary penalties, debts arising and errors in the system being carried forward from one year to the next


• Taxpayers have access to digital accounts — with the information HMRC needs automatically uploaded, bringing an end to the tax return.


At the moment, businesses report information on tax returns and pay liabilities long after the end of the tax year, but MTD will ensure that this process operates much more closely to ‘real time’.


As a result, contractors will be able to see more of a real-time view of their tax and a calculation of the tax due, which means that firms will find it easier to understand how much tax they owe, giving them far more certainty over their tax position and helping them to budget accordingly.


When the changes were first announced, HMRC’s report ‘Making Tax Digital’ stated:


‘Making tax digital for businesses should not have to wait until the end of the tax year or even longer before knowing how much tax they should pay. HMRC will collect and process information affecting tax in as close to real time as possible, to stop tax due or repayments owed from building-up.


‘From April 2018, businesses, including everyone who is self-employed and those letting out property, will update HMRC at least quarterly where it is their main source of income (or a secondary source of income above £10,000 and their main income is from employment or a pension)’.


However, this previously set date has now been put on hold until 2020; news that has been very much welcomed by the contracting community, as businesses and freelancers will now have more time to not only familiarise themselves with digital record keeping, but to ensure that they find the right software and processes for them.


John Preston, CIOT (Chartered Institute of Taxation) President, commented on the recent news, “We are delighted that the government has relaxed the timetable for Making Tax Digital (MTD) and appears to be basing its approach on coaxing rather than compelling businesses into going digital.


“Whilst we are supportive of the government’s long term ambitions for digitalising the tax system, we have always called for this to be achieved in a measured and manageable way. This deferral will give much more time for businesses, supported by their advisers, to identify for themselves, at their own pace, the benefits of digital record keeping. It will also ensure that many more software products can be developed and tested before mandation is reconsidered.”


Whilst the requirement has been deferred for Income Tax, the timetable for VAT has not changed, and VAT registered businesses with a turnover in excess of £85,000 per annum will be obliged to maintain digital records and provide quarterly updates (VAT returns) to HMRC.




PaperRocket Accounting provide accounting and tax services to professional limited company contractors and freelancers working in the UK.


We offer our clients a choice of four all-inclusive fixed fee monthly packages which cover all of their accounting and tax needs (so no hidden costs or surprise bills!). All of our accounting packages include a monthly subscription for a cloud accounting software subscription provided by the awarding winning FreeAgent.


Each of our clients is given their own dedicated qualified accountant with unlimited access in person, telephone, or by email.


We pride ourselves on our client satisfaction and customer service and were shortlisted as 'Small Practice of the Year 2016' in the AccountingWEB practice excellence awards, as well as FSB Hertfordshire Service Excellence finalists in 2015 and 2016.


To find out how we can help you please get in touch now.




By PaperRocket Accounting, Aug 8 2017 10:29AM

As a limited company contractor, you are entitled to claim back on a number of expenses, which will then help to reduce your company’s tax bill at the end of each year, as you will not be taxed on purchases made for the running of your company.


Typical contractor expenses include:

• Travel

• Stationary and other office items

• Mobile phone or business phone bills

• Computers and software

• Accountancy fees


Many limited company contractors might not be aware that they are also able to claim back on business entertainment. However, what you are able to claim back on will depend on who it is that you’re ‘entertaining’ – this is where you need to determine whether you are providing ‘business entertainment’ for clients or ‘employee entertainment’



Business Entertainment


Entertaining a potential or existing client can be a great way to strengthen business relationships, but many contractors may be confused as to whether they can reclaim these types of costs.


When it comes to business entertainment, HMRC explains that entertaining a client for social reasons is seen as non-business entertainment; however, discussing a particular business project and forming or maintaining a business connection is classed as business entertainment…


An example of a legitimate expense would be if you were meeting a client over lunch to discuss a project – in this case, as long as HMRC didn’t see the meeting place as being ‘excessive’ it could count as an expense.


It’s important to be aware that all limited companys will need to pay Corporation Tax on its taxable profits – so on any money that your company makes from doing business, investing and selling assets for more than they cost.


You can reduce your overall tax bill by reclaiming certain costs, however, it is not possible to reclaim the cost of entertaining clients against your firm’s Corporation tax bill.


You are also unable to reclaim VAT on entertainment costs that are made solely for clients.



Employee Entertainment


Claiming back on entertainment costs for your staff is much simpler.


If you want to reward your employees with a party for example, you will just need to ensure that you meet certain conditions.


For example:


• Every member of staff must be invited to the event in order for you to be able to claim back on the expense.


• You will need to ensure that the cost of each person does not exceed £150 – going above this amount will mean that any costs are then subject to tax and national Insurance Contributions.


• If you wish to include your employees’ partners with these events, you can still claim tax relief, just as long as the total figure does not exceed £150 per member of staff attending.


• If you do have more than one annual event a year, you will need make sure that the total claim for all of these doesn’t go over the £150 per head.



PaperRocket Accounting provide accounting and tax services to professional limited company contractors and freelancers working in the UK.


We offer our clients a choice of four all-inclusive fixed fee monthly packages which cover all of their accounting and tax needs (so no hidden costs or surprise bills!). All of our accounting packages include a monthly subscription for a cloud accounting software subscription provided by the awarding winning FreeAgent.


Each of our clients is given their own dedicated qualified accountant with unlimited access in person, telephone, or by email.


We pride ourselves on our client satisfaction and customer service and were shortlisted as 'Small Practice of the Year 2016' in the AccountingWEB practice excellence awards, as well as FSB Hertfordshire Service Excellence finalists in 2015 and 2016.


To find out how we can help you please get in touch now.



By PaperRocket Accounting, Aug 3 2017 05:00AM

With the snap General Election putting a lot of things on hold, including the eagerly anticipated Matthew Taylor Review of Modern Working Practices, it has now been released with the gig-economy in particular feeling extremely positive with the results.


Matthew Taylor, the Chief Executive of the Royal Society of the Arts, led the review, which considered the implications of new forms of work, driven by digital platforms, for employee rights and responsibilities, employer freedoms and obligations and our existing regulatory framework surrounding employment.


The review looked at six main schemes, including:


• Security, pay and rights – for example, ‘to what extent does the growth in non-standard forms of employment undermine the reach of policies like the National Living Wage, maternity and paternity rights, pensions auto-enrolment, sick and holiday pay?’


• Progression and training


• The balance of rights and responsibilities – ‘do current definitions of employment status need to be updated to reflect new forms of working created by emerging business models?’


• Representation


• Opportunities for under-represented groups


• New business models


Proposed changes include the suggestion that those working for gig-economy firms should be seen as ‘dependant contractors’ instead of self-employed with talks about them receiving more employment rights.


The Association of Independent Professionals and the Self-Employed (IPSE) have had their say on the matter, stating that a new ‘dependent contractor’ status ‘doesn’t negate the need for a statutory definition of self-employment’.


The body does welcome the report’s acknowledgement that self-employment is a really positive decision for most people who work in this way, and believes government should do everything in its power to support people’s decision to work flexibly.


It also agrees that the self-employed should be clearly differentiated from the other employment statuses and calls for a statutory definition of self-employment. However, IPSE believes reforming the current worker status into a new ‘dependent contractor’ status should look beyond control and direction as indicators.


Chris Bryce, IPSE chief executive, commented on the Taylor Review, “We welcome Matthew Taylor’s recommendations which protect the flexibility of self-employment, but any changes to employment status should bring clarity and not add to the confusion around how government treats the way people choose to work. Mr Taylor’s recommendation to align tax and employment status would be a clearly positive step, as this is an issue that currently causes a great deal of confusion.


“When people talk about the gig economy, there is often the mistaken assumption that the services operating in it are all the same. Each relationship has to be judged on its own particular merits, and it would have been a huge error to simply place everyone in the gig economy within the revised worker status. This is why it’s essential to enshrine what it means to be self-employed in law.”


He added, “Renaming workers ‘dependent contractors’ might bring some benefits, but government will have to be absolutely clear who falls into this group. It will still be up to the courts to rule on employment status. We also have a serious concern that it is far too reductive to only look at direction and control as indicators of worker – or ‘dependent contractor’ – status. In reality, things are a lot more complicated than that. You should still also consider the ability to choose when and where you work, whether the role is project based and whether you have the right to send a substitute.”




PaperRocket Accounting provide accounting and tax services to professional limited company contractors and freelancers working in the UK.


We offer our clients a choice of four all-inclusive fixed fee monthly packages which cover all of their accounting and tax needs (so no hidden costs or surprise bills!). All of our accounting packages include a monthly subscription for a cloud accounting software subscription provided by the awarding winning FreeAgent.


Each of our clients is given their own dedicated qualified accountant with unlimited access in person, telephone, or by email.


We pride ourselves on our client satisfaction and customer service and were shortlisted as 'Small Practice of the Year 2016' in the AccountingWEB practice excellence awards, as well as FSB Hertfordshire Service Excellence finalists in 2015 and 2016.


To find out how we can help you please get in touch now.




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