Benefits of Having a Contractor Accountant in London

May 11th, 2012 Admin POK

Are you freelancing in London? Perhaps you’re working as one of the many IT contractors in the city? Then perhaps it’s time you learned the benefits of having a specialist London contractor accountant to make being self employed as profitable as possible.

As you know, London is the largest contractor hub in the UK with more contractors and contractor vacancies than any other city. There are more than 3.7m people working in the capital and rates of pay for contractors can vary depending on individual skill-sets from IT contractors earning between £450 to £500 per day on average, while very specialist contractor rates can be as high as £1,000 per day!

But do I really need an accountant in London?
If you neglect your books, the amount you pay the HRMC in tax could be equally high should you fall within the IR35 legislation. This is why managing your books and having them looked over by an accountant is an important part of being a contractor or freelancer.

London contractor accountants in particular specialise in handling the books of people who are self employed as freelancers or entrepreneurs of small businesses. Their location in the city will also ensure that they are up to speed when it comes to claiming expenses on your behalf for all sorts of things from Underground travel to stationary and business lunches, so long as you keep the receipts of course.

Keeping your receipts and recording all expenses will help to make sure that your forms P11D, P9D and P11D(b) are accurate at the end of the tax year, and to ensure that you and any employees pay the correct amount of tax and National Insurance contributions.

However, in the crush for competitive contracts, most contractors will be too worried about where their next contract is coming from than the fact that a good accountant can help them to make even more money from their earnings, whether it’s through expenses, dividends or even property purchased using a pension pot and rented back to the company for a pittance.

Sometimes this is due to being disorganised, sometimes it is down to a cynical belief that an accountant will require a costly sum of money and provide no real benefit. However, in the fast moving capital this couldn’t be further from the truth.

Considering how much a good contractor accountant could save you in expenses, they would cover their own costs and net you a greater profit from your contracts.

A London based accountant can also provide invaluable insights and advice which well aid your business in the long run. So it’s definitely a worthwhile investment for any contractor whether you are in IT, finance or hospitality and retail.

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Pension Loans UK Offers the Solution

April 19th, 2012 Admin PAL

Pension loans are certainly the most effectual substitute to get cash throughout monetary disaster. When you are weary doing false efforts to place money all through the outdated ways such as loan in contradiction of property, you could increase capitals from your annuity amount. The loan shows its competence when you are needs instant money. It’s either you need to come across your fees or in search of moneys to begin a business, pension loans UK will help you make your dreams comes to life. In the current situation, where getting finances from bank is very hard and wearing, loan in contradiction of pension provides a greatest answer.

Getting recognition from banks or additional capitals could be complicated. It will as well carry load of tall interests. Because of this, a lot of people are choosing pension loans. As contrasting to old-style loans, you don’t need to provide full details about how you are bound for use the cash or for what reason you wish to get the loan. Pension loans UK could be assimilated for different reasons, even if it is for home repair, inducement for your current fees or purchasing a car or house. The loan could be of any volume, but not over 50% of your whole pension endowment.

As the notion of loan in contradiction of pension is justly new, not a lot of people are conscious of their suitability and welfares of such loan in excess of conservative loans. If formerly you were not conscious of the standings of pension loans system or loan in contradiction of pension, now you are aware of what it means and how it could save you throughout the period of need. On the other hand, the circumstances of loans might vary contingent on the pension loan carriers. Because of this, it is suggested to look up the company managerial prior to making headway. A great pension loans UK corporation will constantly escalate your anxieties and will offer permitted consultancy. You could fix an appointment with them earlier and make use of their online service too.

An additional benefit of pension loans is that you don’t need to keep time on top of your busy schedule so as to clear the loan process.

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Business Trading Options

April 3rd, 2012 Admin ROP

Making the move to start up your own business can be a intimidating prospect. You have the ideas, the start up capital and you’re ready to start trading, the question remaining, is what you should trade as. When thinking about company formation you have a number of options available to you, some of the advantages and disadvantages I will attempt to outline here.

Sole Trader

By far the simplest type of company, by trading as a sole trader you won’t need to undertake any form of registration apart from notifying your local tax office. You would be responsible for all aspects of the company and have personal liability in terms of debt and finance – essentially, you are the company. Although setting up as a sole trader is easy, it is difficult to attract clients with a lack of company transparency trading as a limited company would give you, and as you are personally liable, debts are easily incurred.

Private Limited Company (Ltd)

A private limited company is considered a legal entity and is therefore distinguished from its owners, meaning liability is transferred from the shareholders to the company itself and any debts incurred will not be the owner’s responsibility unless personal possessions have been secured against a loan. Tax rates can be advantageous and they are relatively easy to set up. Due to their simplicity and financial advantages, Ltd companies are the most common in the UK.

Public Limited Company (Plc)

A Public Limited Company is different from a Private Limited Company in that shares can be sold to the wider public. To set up a public limited company £50,000 worth of shares must be released before being allowed to trade. Two directors must also be appointed. Clearly, although through Plc’s a huge amount of wealth can be generated on the stock market it is only suited to large companies.

Limited Liability Partnership (LLP)

This kind of company permits business partners to enjoy the advantages of limited liability without the problems of liability that come with normal partnerships. There are no shares within this kind of company and an agreement will need to be drawn up in order to establish how profit will be split. Tax arrangements will also be the same as with normal partnerships.

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SIPP tax savings

March 26th, 2012 Admin PAL

Thinking about the future or rather engaging in certain future pension plans is perhaps the most cardinal issues in today’s age of inflation and health hazards. It is in fact, the prime responsibility of any personality to secure one’s future from the upcoming days of expensiveness, through some or the other pension plan schemes, which have recently boomed the market to every individual’s surprise. One such pension plan schemes that have revolutionized and excelled the worldwide market in almost no time at all is the SIPP tax saving pension plan scheme.

A Self Invested Personal Pension normally known as a SIPP pension plan is actually nothing but an insurance policy designed by several investment companies that can help one to manage his self-funded future pension scheme in order to make one’s future secure and comfortable. As an added advantage these plans also have a surprising tax benefit quality added to their title. The offer is designed in such a way that it can give one an additional tax return relief with the leveled increase in one’s paying rate, which can give one an above satisfactory relief from the tensions of taxation orders.

However, instead of being such an eye catcher in the market, there is obviously a tiny deficiency related to these SIPP pension plans, according to which there is a certain nominal taxation programme levied upon the system at the time of income drawdown after retirement. Nonetheless, it can still be of huge benefit when compared to the actual tax rate that can be levied per year on one’s income. Moreover the after- retirement money drawn can even be rescheduled for another tax-free fresh investment that can be fruitful too.

As an even added advantage, a SIPP pension plan also gives one the flexibility of investing one’s deposit into a variety of stock market programmes, which might in fact help one to manifold their income to an unimaginable extent. With so many added bonus schemes offered in a palate by the plan, it really seems worthy for a person to give it a try. However, taking a thorough knowledge about the nooks and corners of the scheme is a must before investing. It can give one the desired satisfaction with the plan that he might desire to execute.

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IR35 Legislation Information

March 6th, 2012 Admin POK

Looking for information about the IR35 legislation? Then you’ve found the perfect guide that simply explains what the IR35 is, how it can affect your finances and how best to work around it.

Ever since the IR35 legislation was introduced it has been a murky area for contractors and freelancers. However, the intention of the legislation was to prevent full-time employees from profiting from side-lines without paying extra tax on the additional earnings.

In recent events there has been some controversy regarding who is and who is not affected by the IR35 – Public sector workers in particular. As a result many contractors find IR35 completely unjust while leaving a bitter taste in the mouths when the ‘Office of Tax Simplification ‘called for IR35 to be culled or reviewed in 2011, yet this was ignored by the UK coalition government.

So with no help from the Government, it is up to you to protect yourself from the IR35, or if you do fall within the IR35, it is up to you to manage your accountants intelligently in order to offset any losses to the tax man for your additional earnings.

Does the IR35 apply to me?
Simply put, if you are a contractor, the IR35 should not apply to you. However, you still need to clearly demonstrate to the HMRC and document that you are a ‘self-employed contractor’. There are guidelines for this on the HMRC website, but if all the technical jargon is getting in the way, it’s always worth speaking to a specialist contractor accountant to simplify things and have the IR35 explained in detail from an accountant’s perspective.

What should I do if the IR35 does apply to me?
If you can prove that you are a contractor working through your own limited company, you are except from the IR35. However, if you are an employee doing extra work as an additional source of income, or you fail to sufficiently prove that you are full-time contractor, then it may be worthwhile creating a limited company.

By creating a limited company you will still be required to pay more tax on any additional earnings, however, you can offset these losses by claiming travelling and accommodation expenses.

So in conclusion, the best way to avoid the IR35 is to be completely honest about your earnings and keep well managed accounts. Even should you find yourself within the terms of Intermediaries Legislation 35, there are still benefits to be had.

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Using a Contractor Calculator

February 16th, 2012 Admin POK

Whatever part of the industry you are in there are always great benefits to be had by making the move to contractor. These benefits include more control over your job and work hours, wider range of skill development, whereabouts you actually want to work from – and finally the financial bonuses (which can be significantly more).

Functioning through a limited company is known as the most efficient way of working tax-wise. Some of the time people become slightly confused and start banging their head against the wall when they have to start dealing with paperwork, business planning and financial plans/strategies.

How a Contractor Calculator can help

If you’re looking for an easier way of predicting your financial situation concerning incomings and outgoings, the best thing to use is a contractor calculator. If you are in liaison with a contractor accountant, they should have a part of their website which deals with different styles of calculators, which indefinitely can help you with all your financial planning endeavours.

Keep in mind that a contractor calculator is only a rough prediction of what can be claimed, paid or earned. It is a device which supplies you with information which will ultimately help you in regards to:

  • Fuel planning
  • Salary outgoings
  • Tax
  • Expenses
  • Dividend
  • Tax
  • VAT

These are just some of the functions of a contractor calculator.

Business Plan

A contractor calculator should be indeed used when quick, small decisions need to be made affecting your company and business. The best thing to do, in my opinion, is at the genesis point of any business – is to create a business plan. Planning gives benefits such as the ability to make continual improvements, more focus, and clearer financial goals whilst gaining hindsight of issues you may need to address.

A good contractor accountant will be able to advise you upon all of this, whilst offering you more slightly more exact figures if needed upon tax and business planning.

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Process of moving from permanent to contracting

February 7th, 2012 Admin POK

New at Contracting?

When moving from permanent to contracting, the change might be a little scary. However, there is no real reason for the fear. This article is a step-by-step guide into contractor-hood, hopefully making the process of change a little easier for you.

1) Find a Contract. Make sure your CV is completely up to date, engineering it with keywords and facts to suit the style of contract job you are after.  With so many job roles and opportunities out there, make sure you utilise the internet by registering with as many online job sites as possible to maximise your chance of finding a contract.

2) Know you IR35 Status. IR35 legislation was introduced by the government to make sure that contractors have not taken on a work ethic which may be similar to that of a permanent worker. You might be taking home less home pay if you fall under IR35 legislation. Your recruiter should inform you as to where you are inside or outside of IR35.

3) Limited or Umbrella? Normally contractors choose to work through an umbrella company if working with short term, lower value contracts earning less than £25,000 a year.  These contractors will normally earn between 60%-65% of their contract. Accountants for contractors will tell you that working for a limited company is the most efficient, and you can potentially take home about 75%-80% of your total contact worth. Administrative work-wise there probably is about 15 minutes a month on average that you will have to deal with, however, you will benefit from hiring a contractor accountant to deal with this plus help you with any other issues.

4) Appoint an accountant for contractors. Getting hold of an accountant who is experienced in the field of dealing with contractors is very helpful. A contractor accountant will give you advice, taking you on your journey through your contracting career.

5) Forming a Limited Company. Using a contractor accountant will be able to help you with forming your own limited company. Any good contractor accountant should be able to supply you with the forms that you need to do so, which is a quick process enabling you to start trading that very same day.

6) Create your Business Bank Account. An experienced accountant for contractors will probably inform you that opening and setting up a business bank account is essential. Being a contractor, you need to keep your personal account separate to your business one – since your limited company is seen and treated as a separate entity. Therefore, all your business transactions should go through your business account, funnily enough.

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Debt Solutions to Keep Creditors at Bay

January 20th, 2012 Admin LKF

During the past few years a number of debt solutions have been made available to UK consumers in the hopes of helping them from becoming insolvent. Some of these solutions are legally binding and once ordered by a UK court, creditors cannot take legal action against the debtor if the terms are kept and repayments are made timely. One of the most important debt solutions which can help avoid individual insolvency in England and Wales is an Individual Voluntary Arrangement, commonly referred to as an IVA.

If you own your home, vehicle or have any assets worth more than £300, you couldn’t take advantage of the newer debt solution which is a Debt Relief Order, DRO. In addition to assets, if you earn more than £50 a month you would automatically be disqualified for a DRO and if you owe less than the specified amount of £15,000 a DRO would not be open to you. Because of all the nuances within an IVA and a DRO, it helps to have the professional counsel of a licensed IP such as debtfreeme.

The reason why creditors are kept at bay once an IVA has been ordered is because the order is signed in a court of law once all the conditions are met. Such things as the percentage and number of creditors who must agree to the IVA are taken into account before ordering the IVA and once it is ordered, those creditors cannot take any legal action against the consumer unless the person doesn’t keep the terms of the agreement.

Finding solutions to debt in the UK is easier than ever before, but according to law, some of these solutions must be overseen by certified Insolvency Practitioners. Debt Free Me has helped tens of thousands of UK consumers avoid the pitfalls of insolvency and are certified to represent consumers in the courts and with creditors. Don’t let debt weigh you down to the point of being bankrupt when there are debt solutions to keep creditors at bay.

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Estate Tax Solutions

October 20th, 2011 The Web Clinic

An Estate Tax solution can offer different levels of access to income and capital depending on your circumstances. Many solutions need to run for 7 years before they fulfil their goals but an immediate saving can be made in the event of passing away within the first 7 years through the use of a Discounted Gift trust and through taper relief.

Some advisers offer solutions using Business Property relief which can place the money outside your estate after just 2 years, but there are various considerations which must be understood before following this strategy.

Usually a combination of different Trust structures can offer the most effective and flexible solution to the clients objectives.

The type of solution will also depend on how the money is held; for example whether it is in property, cash or invested assets. Many people believe it is possible to gift a family home to a beneficiaries’ estate but continue to live there. Due to recent changes this process is known as a ‘gift with reservation of benefit’ and HMRC will most likely class the property as part of their estate. Other new rules include a Chargeable Lifetime Transfer Tax on assets placed in a Discretionary Trust over the Nil Rate Band and again it is highly advisable that people seek professional advice to ensure they are using the most cost efficient method of Inheritance Tax planning.

All planning strategies will have consequences of some form so it is advisable to seek professional Independent Financial Advice to ensure you achieve all of your future income and capital objectives along with reducing a potential tax bill where possible.

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What can be done about Estate Tax?

October 12th, 2011 The Web Clinic

After recently attending an Estate Tax seminar I am confident that I can reduce my tax bill by placing money into an investment in trust and then living for another 7 years. I would then be able to receive an income from this and assuming I don’t take back more than 5% of the initial invested amount then there would be no immediate tax liability. This was something which I had heard was true but it is good to confirm these things with the experts and I now feel confident enough to put something in place. I don’t expect the investment to make a significant return, although I would like it to provide around 5% per year if possible, just so that my income payments can be made without reducing the capital too much. I understand that inflation will eat away at the real value of the investment but I’d be happy living off 5% per year and knowing that my family won’t have to pay a large inheritance tax bill when I pass away.

If there is a more flexible solution which I have not considered then I would be interested in hearing it.

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