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Contractor Accounting & Resources

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With our specialist contractor accountants, you'll never have to worry about staying on top of your finances. You'll get personalised advice from your dedicated accountant, access to a plethora of resources and stellar customer support. Don't take our word for it—see what our customers are saying about us on Trustpilot!

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Annual Accounts
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Self Assessment tax return
Registred company address
Confirmation statement
Grow
£139
+ VAT per month
All Start & Operate features
Proactive tax planning & advice
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£1M  Professional Indemnity
2 x Self Assessment tax returns

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UK Contractor Resources:

What is a contractor?

There's a few routes to start working as an independent contractor in the UK. From finding work to setting up your business, we'll help walk through everything you need to consider.

What is a contractor?

A contractor is a professional that provides skills and services to a specific client under set terms. The terms can be for a set number of hours, a certain time frame or duration of a project.

A contractor is responsible for their own dealings and has discretion over the work they carry out.

What are the different types of contractors?

Contractors generally fall under two categories:

Contractors are not to be mistaken as temporary workers, who are hired to fill the boots of a permanent employee.

What is an independent contractor?

An independent contractor is another term to describe a general contractor who works for themselves (self-employed). Independent contractors typically operate through their own limited company.

Is a contractor self employed?

Contractors are self-employed individuals working as a sole trader or their own limited company. They can be 'employed' via an umbrella company; however, umbrella company contractors will not hold the same employment rights as a typical permanent employee.

Is a contractor an employee?

Contractors can be an employee of an umbrella company; however they typically won't have the same employment rights of an employee. Unlike employees, contractors will have discretion over the work they complete, and are responsible for their own business dealings.

How do I become a contractor?

Most people start contracting after they have already received an offer for a job that requires an independent contractor (typically paid on a day rate).

Others start when they have work opportunities outside of their current permanent role. We'll walk you through everything you need to consider and how to become a contractor in our resource hub.

What are the advantages of contracting?

Flexibility - contractors have a lot more control over their work life often deciding when they work, where they work and how they work. Not only this, contractors have a lot more flexibility when it comes to managing their finances.

Increased earnings - contractors are often paid more due to their skill sets, and the flexible nature of their working relationships. Linking back to also having flexibility with their finances, they can use to this to their advantage, especially when working through their own limited company.

Greater development - often working with multiple clients throughout their career, contractors are exposed to a lot of opportunities to develop their skills and build on their experience in their area of expertise.

What are the disadvantages of contracting?

Uncertainty - Following the flexible nature of working relationships, contractors are never guaranteed work after the end of assignment or project.

Responsibility - Not only is it the responsibility of the contractor to find work, they are also responsible for their own finances.

Employment rights - As a contractor, you generally wouldn't find yourself holding employment rights that permanent employees benefit from.

How do I find contractor jobs?

Contractor jobs can come from a variety of sources but the main routes are:

You can read our full guide on 19 places to find contractor jobs.

Employing contractors

There are a few steps you'll need to consider with hiring contractors - we've put together a full guide to hiring contractors here.

Umbrella vs Limited Company Contractors

You may have to operate through an umbrella company due to IR35. However, if you're able to choose between different ways to operate, it's generally more tax efficient to set up a limited company, particularly if you think you'll earn over £25k per annum through your business.

FAQs

What is an Umbrella company?

An umbrella company sits between the contractor and their client/agency.

The umbrella company employs workers on fixed term contracts, and allows the contractor to operate on a PAYE basis (as if they were a full-time employee).

Advantages of Umbrella company

Statutory employment rights - Falling closely in line with a permanent employee but on a short term basis, the contractor will receive employment rights.

Reduced admin - As the Umbrella Company will handle the contractors taxes and pay, this reduces the admin and responsibility of the contractor.

Disadvantages of Umbrella company

Less tax efficient - As contractors taxes are dealt with at source via payroll, working through an umbrella company offers less tax efficiencies (compared to if a contractor were to work through his or her own limited company).

Less flexibility - As the umbrella provider handles or manages many aspects of a contractor's work, contractors typically have less flexibility over their own affairs.

What is a Limited Company?

Speaking in broad terms, a limited company is a separate business entity that is controlled by its investors and directors.

Advantages of a Limited Company

Tax efficiency - Flexibility in tax planning, as a director/ shareholder of your own business allows for greater tax savings to be made.

Higher take home pay - In line with the flexibility a limited company offers, the personal tax rates paid whilst working through your own limited company as a whole tend to be lower than that of a sole trader or employee.

Limited liability - With the nature of a limited company being a separate entity, its owners hold limited liability meaning they have more protection over their personal assets.

Higher status - Operating as a limited company gives your business a feel of professionalism and status. This enables you to build credibility with both existing and potential clients.

Disadvantages of a Limited Company

Increased responsibilities - As the director and shareholder of a limited company, there will be an increase in responsibilities and duties to take care of such as tax returns and business accounts.

Reduced privacy - Details of all limited company's, directors and persons of significant control are held on public record.

Higher fee's - The accounting duties of a limited company are more complex than some of the other contracting options available and so this often comes at a higher price.

When do I need a Limited company?

There is no clear cut time as to when you should start working through your own limited company. With other routes available (i.e. sole trader or umbrella company), it is always worth weighing up what is best for you and your circumstances.

With that being said, if you plan to work as an independent contractor for the foreseeable future, opening your own limited company at the early stages can maximise your opportunities for reaping the benefits of having your own company straight away.

Umbrella vs Limited Company

We recommend weighing up the pros and cons of each option, and to evaluate what's the best way for you to operate.

As a general rule of thumb, working through an umbrella provider tends to be the best option for short-term contracting, while starting your own limited company is the better option if you see yourself working as a contractor for a longer period.

How do I set up a Limited Company?

Setting up a limited company is a relatively quick and easy process. This can be  done directly with Companies House, but there are some steps afterwards that can be a bit more fiddly.

Once your company has been created, the following documents must be completed and returned to Companies House to finalise the process:

  • Memorandum of Association – limited company name, location, business type
  • Form 10 – director’s names, addresses and registered limited company address
  • Form 12 – states the limited company complies with the terms and conditions of the Companies Act
  • Articles of Association – outlines director’s powers, shareholder rights etc. (this is often provided by the formations company that sets up the limited company)

At Forma, we provide assistance with the full incorporation process. Do get in touch to find out more about how we can help you.

What do I need to do as a Company Director?

As the director of your own limited company, you are responsible for the running and management of the company.

It is your job to make sure that key deadlines are met and information is kept up to date. Take a look at our guide on the responsibilities of a limited company director for more information.

What is IR35? Inside/ outside IR35 and IR35 news

What is IR35? IR35 was designed to identify contractors and businesses which are fulfilling the role of a permanent employee (known as disguised employment). It works by looking at an individual's true employment status, and ensuring the appropriate tax is paid.

What is IR35?

Introduced back in 2000, IR35 was designed to identify contractors and businesses which are fulfilling the role of a permanent employee (known as disguised employment). It works by looking at an individual's true employment status and ensuring the appropriate tax is paid.

IR35 Overview

When is IR35 happening?

Now. IR35 was originally introduced back in 2000, but is continuously undergoing changes, including the recent April 2021 reform.

What does IR35 mean for contractors?

IR35 means that contractors will need to consider their true employment status when working on an assignment, to ensure that the correct tax is paid according to their status. Presently, this is true for contractors working for a small non-public sector organisation.

In the public sector, the contractor will often be told their IR35 status before the engagement begins. With the April 2021 reform, contractors working for a medium or large-sized non-public sector organisation will also be told their employment status before an engagement begins.

What does IR35 mean for employers?

In the public sector, the hiring organisation will need to determine the IR35 status of the contractor before the work begins.

With the April 2021 reform, contractors working for a medium or large-sized non-public sector organisation will also be told their employment status before an engagement begins.

Contractor Accountants & accounting advice

Get help with your accounting as a contractor.

What can accountants help with?

The goals for accountants is to help businesses with tax and compliance duties, whilst providing strategic advice to save money and time. This allows business owners to focus on their core activities.

Everyone knows that accountants will complete tax returns and accounts, but the very best accountants will go one step further to ensure the very best for their clients.

How do I find an accountant?

In today's times, you can easily find an accountant through an online search. Take a look at our guide on choosing an accountant for further information on what you should look out for.

Contractor accounting pricing

Like with all service offerings, you can find contractor accountants across different price points.

Some accountants will charge by the hour, some by deliverable, or through offering a fixed monthly fee that covers everything you need in one package.

Best contractor accounting software

Software can go a long way in assisting businesses and accountants alike. Often an accountant will have a preferred software that they use —this can be something bespoke they have developed themselves, or something they love and trust off of the shelves.

Our accountants at Forma have tried and tested many different solutions, and recommend FreeAgent as the clear winner among the contractor accounting solutions available.

Do I need to register for VAT?

If your business has an annual income that exceeds or expects to exceed £85,000, then you must register for VAT.

If your annual turnover is lower than £85,000, you're not required to register for VAT. However, it may be something you choose to do voluntarily, depending on whether the benefits of doing so outweigh the downsides.

Advantages of VAT registration

You never lose money being VAT registered - and will most likely be able to increase your overall profits by being able to charge the VAT on top on your usual rate and reclaim VAT on your expenses.

Professional image - it is generally seen that VAT registered companies are larger and more established.

Disadvantages of VAT registration

Added responsibilities - being VAT registered will bring the additional responsibility to file VAT returns with HMRC. This could be on a monthly, quarterly or annual basis depending on the VAT scheme. With this added responsibility does come additional paperwork whilst you must keep a tally of all things VAT related.

Competition - depending on your end clients, being VAT registered can also put you at a price competitive disadvantage. If you tend to work with individuals that are not VAT registered themselves, having to charge them VAT that they cannot reclaim could mean your prices are higher than your competitor.

When do I pay VAT?

Most businesses will report VAT on a quarterly basis, with the payment being due within 1 month and 7 days after the end of the reporting quarter.

What expenses can I claim?

As a contractor, there are a vast number of different expenses that can be claimed for when working through a limited company.

These expenses must be deemed wholly, exclusively and necessary for business to carry out it's duties and some examples can include:

  • Travel
  • Food (subsistence)
  • Accommodation
  • Computer & office equipment
  • Postage & Stationery
  • Accountancy & professional fee's
  • Insurance
  • Telephone & internet

Further information is available on our guide to limited company expenses.

How do I pay myself?

A contractor working through their own limited company can pay themselves through two different ways: drawing a salary or taking dividends. There are a few factors that need to be considered when deciding the best way to go about this.

For example, when operating inside IR35, contractors will be restricted to paying themselves a salary. If a contractor is deemed to be operating outside IR35, they have the option of drawing a salary and/or dividends to maximise tax efficiencies.

What is the optimal salary?

The optimum salary for a contractor to pay themselves in the current tax year is dependent on their overall income throughout the period.

In the instance there is no other income to be considered, it is generally recommended that salary is paid in line with the Secondary National Insurance threshold, which is currently £737 per month or £8,840 per year (2021/22).

What are dividends?

Dividends are the distribution of a company's profits to its shareholders.

What deadlines do I need to know?

As the director of your own limited company, it is your responsibility to ensure that all deadlines are met (and there can be quite a few to keep track of). Further information is available in our guide on important dates you'll need to keep tabs on.

Self Assessment Tax Returns

As a limited company director, you are required to submit a yearly self assessment tax return to HMRC to report your personal income and taxes. Further information is available on our guide to Self Assessment tax returns.

Year End Accounts

Every limited company is required to submit annual year end Accounts to Companies House. Due within 9 months of the company year end, the accounts contain an overview of the company's financial activity for the year.

Confirmation Statements

Alongside keeping Companies House up to date with the company's financial activity, it is also the responsibility of the directors to keep the records up to date with the company's general information.

Each year, a confirmation statement is submitted to confirm details such as the address, shareholder information, director information and more.

UTR Numbers

Individuals and company's are identified by HMRC by Unique Tax Reference Numbers (UTR). These unique references stay with the company and individual.

What is a P11D?

A P11D is a form submitted to HMRC to declare something known as benefits in kind. These benefits in kind are good or services that employees receive from the company outside of their salary. For example, a company car or private healthcare.

Free accounting consultations

If you're looking to have any queries surrounding any of the information covered in our guides & articles or perhaps something we haven't covered then please do not hesitate to book in your free consultation with one of our expert accountants!

Tax advice for UK Contractors

What are the dividend tax rates?

Unlike salary, dividends are not taxed at source and instead any tax due becomes payable yearly as part of a self assessment tax return. Because of this, it's important to consider the tax rates applied as follows:

  • The tax-free dividend allowance is £2,000
  • Basic-rate taxpayers pay 7.5%
  • Higher-rate taxpayers pay 32.5%
  • Additional-rate taxpayers pay 38.1%

What is UK corporation tax?

UK corporation tax is a tax payable by UK Limited Company's. It is calculated on the profits the company makes throughout its accounting period.

How much is UK corporation tax?

The current rate of corporation tax is 19% (20/21).

How do I reduce corporation tax?

As corporation tax is calculated based the company profits, the tax can be lowered by ensuring that you are claiming all allowable expenditure through the company whether this be by ensuring you are recording all your travel costs to considering making a pension contribution.

How does tax change as a contractor?

The biggest change when working as a contractor compared with say working as an employee is that you will become a lot more aware of the taxes you are paying. This because contractors have a lot more control over their finances and taxes with the added responsibility of making sure this is paid correctly and on time.

Contractor insurance

Do contractors need insurance?

As a contractor working through your own limited company, it is recommended that you are covered by business insurances whether that be for your own peace of mind or in fact something that is mandatory in your contract.

What is contractor insurance?

There are several types of insurance that a contractor may benefit from. These policies are known as:

Professional Indemnity Insurance - in case a client sues for making a costly mistake whilst undertaking contractual duties such as the loss of data or unintentional breach of copyright.

Public Liability Insurance - in case a member of the public is injured, or property is damaged as a result of the actions of the company (or its employees).

Employers Liability Insurance - in case an employee is injured (or worse) whilst working for the company. Often mandatory for any company's that has more than one working employee.

Do I need professional indemnity insurance?

Covering legal costs and expenses in your defence as well as any damages or costs that may be awarded, professional indemnity insurance comes highly recommended for those providing professional services. Many professions need to have professional indemnity insurance as part of their respective industry body’s regulatory requirements and so always double check your contractual agreements.

Do I need public liability?

Covering compensation payments and legal costs if a member of the public sues your business because they’ve been injured or their property has been damaged, public indemnity insurance is highly recommended for all businesses. Many professions need to have p insurance as part of their respective industry body’s regulatory requirements and so always double check your contractual agreements.

Can I reclaim insurance costs?

Business insurance costs can be reclaimed through your business and are eligible for Corporation Tax relief.

Contractor insurance discounts

We have a partnership with Superscript (formerly Digital Risks) and can offer a 10% discount on any business insurance policy.

Contractor Bank Accounts

Do I need a business bank account?

When setting up a limited company, a business bank account is essential for keeping your business transactions separate from your personal transactions.

Personally paid expenses vs company paid expenses

Where possible, it is advisable to cover any company expenditure directly using company funds such as directly via the company bank account. This ensures that all company transactions are kept in one place and can be easily tracked.

Claiming personally paid expenses

There may be times when you have no option but to use your personal funds to cover company costs such as paying by cash or if you forget to bring your company card. It's important to keep a copy of the receipt of all expenses but this is especially important when paying for costs and expenses personally. This way, a record of the cost can be kept, logged in your company accounts and then your company can reimburse you for this.

Contractor mortgages

Can I get a mortgage as a contractor?

Definitely so! Following the flexible nature of contracting, you may have to provide a little more information about your finances and expected income but nothing that your accountant shouldn't be able to assist with.

UK Contractor Guides, Calculators and Support

Jeremy Hunt’s announced scrapping of the planned reversal of IR35 reforms and other tax measures has dashed the hopes of thousands of self-employed contractors along with the businesses they work with. 

IR35 rules have been controversial for years. These off-payroll working rules were designed to combat tax evasion, but many businesses and contractors have felt that IR35 added unnecessary complexity to flexible employment.  Former Chancellor Kwasi Kwarteng announced that the IR35 rules would be scrapped for private sector contractors in his Autumn budget, but for now that plan  are no longer on the cards. 

As such, contractors will still have to prove to HMRC that they are not Disguised Employees. 

Keep Reading

Definitely so! Following the flexible nature of contracting, you may have to provide a little more information about your finances and expected income but nothing that your accountant shouldn't be able to assist with.

Keep Reading

Definitely so! Following the flexible nature of contracting, you may have to provide a little more information about your finances and expected income but nothing that your accountant shouldn't be able to assist with.

Are you a contractor looking to get a mortgage? You may be wondering if it’s possible to get a mortgage as a contractor. The answer is yes, you can get a mortgage as a contractor, but the process may be a bit more complicated than if you were a full-time employee.

As a contractor, you may have difficulty getting a mortgage because lenders may view you as a higher risk. This is because you may not have a steady income or you may not have a long-term employment contract. However, there are lenders who are willing to work with contractors and provide mortgages.

In the UK, there are a few options for contractors looking to get a mortgage. The first is to apply for a specialist contractor mortgage. These mortgages are designed specifically for contractors and are offered by some lenders. They may require a larger deposit, but they may also offer more flexible terms.

Another option is to apply for a self-employed mortgage. These mortgages are designed for those who are self-employed and don’t have a regular salary. They may require proof of income, such as accounts or tax returns.

If you’re just starting out as a contractor, you may find it difficult to get a mortgage. Lenders may be reluctant to lend to someone who hasn’t been in business for very long. However, some lenders may be willing to consider your application if you can provide evidence of your income and your business plan.

When applying for a mortgage as a contractor, it’s important to be prepared. You’ll need to provide evidence of your income, such as bank statements, accounts, and tax returns. You’ll also need to provide proof of your business plan, such as a business plan template or a business plan document.

You may also need to provide evidence of your creditworthiness, such as a credit report. This will help lenders assess your ability to repay the loan.

When applying for a mortgage as a contractor, it’s important to shop around and compare different lenders. Different lenders may have different requirements and may offer different interest rates. It’s also important to read the terms and conditions of the loan carefully before signing anything.

If you’re a contractor looking to get a mortgage, it’s important to remember that it’s possible. With the right preparation and research, you can find a lender who is willing to work with you. Just make sure you understand the terms and conditions of the loan before signing anything.

Where possible, it is advisable to cover any company expenditure directly using company funds, such as making a payment directly via the company bank account. This ensures that all company transactions are kept in one place, and can be easily tracked.

If you're paying for business expenses through your personal funds, it helps to establish a process for expense tracking and claiming (just as you would, if you were to make a claim from an employer). It's best to set aside time to manage your expense claims on a regular basis, such as once a month or fortnight. You can keep track of your expenses by using a spreadsheet, or through apps such as Expensify.

Keep Reading

Where possible, it is advisable to cover any company expenditure directly using company funds such as directly via the company bank account. This ensures that all company transactions are kept in one place and can be easily tracked.

Business insurance costs can be reclaimed through your business and are eligible for Corporation Tax relief.

Keep Reading

Business insurance costs can be reclaimed through your business and are eligible for Corporation Tax relief.

Starting a business can be a daunting task, but it is an exciting and rewarding venture. One of the most important aspects of starting a business is to make sure you are properly insured. Insurance can protect you and your business from a variety of risks and can give you peace of mind that you are covered in the event of an incident.

As a contractor, you may be wondering if you can reclaim insurance costs. The answer is yes, you can. In the UK, contractors are allowed to reclaim insurance costs as long as they are incurred in the course of their business. This includes insurance for vehicles, property, and liability.

When it comes to reclaiming insurance costs, it is important to remember that you must have a valid business purpose for each policy. This means that the insurance must be necessary for the operation of your business and must be used for the purpose of earning income.

In addition to the business purpose, you must also ensure that the insurance policy is valid and up to date. This means that you must ensure that the policy is current and that the premiums are paid on time.

When it comes to reclaiming insurance costs, it is important to keep accurate records. This includes keeping a record of all premiums paid, the date of payment, and the policy number. This information will be needed when filing a claim.

In order to successfully reclaim insurance costs, you must also be able to prove that the cost of the insurance was necessary for the operation of your business. This means that you must be able to demonstrate that the insurance was necessary for the business to function.

When it comes to reclaiming insurance costs, it is important to remember that the costs must be reasonable. This means that the cost of the insurance must be in line with the risks associated with the business. If the cost of the insurance is too high, it may not be possible to reclaim the costs.

If you are looking to reclaim insurance costs, it is important to keep in mind that the process can be complicated and time consuming. It is important to make sure that you understand the process and that you are prepared to provide the necessary documentation.

When it comes to reclaiming insurance costs, it is important to remember that the costs must be reasonable. This means that the cost of the insurance must be in line with the risks associated with the business. If the cost of the insurance is too high, it may not be possible to reclaim the costs.

It is also important to remember that the cost of insurance is tax deductible. This means that you can deduct the cost of the insurance from your taxable income. This can help to reduce your overall tax bill and can help to make your business more profitable.

When it comes to reclaiming insurance costs, it is important to remember that the costs must be reasonable. This means that the cost of the insurance must be in line with the risks associated with the business. If the cost of the insurance is too high, it may not be possible to reclaim the costs.

When it comes to reclaiming insurance costs, it is important to remember that the costs must be reasonable. This means that the cost of the insurance must be in line with the risks associated with the business. If the cost of the insurance is too high, it may not be possible to reclaim the costs.

In conclusion, contractors in the UK can reclaim insurance costs as long as they are incurred in the course of their business. It is important to remember that the costs must be reasonable and that the insurance must be necessary for the operation of the business. It is also important to keep accurate records and to be able to prove that the insurance was necessary for the business to function. Finally, the cost of the insurance is tax deductible, which can help to reduce your overall tax bill and make your business more profitable.

Covering compensation payments and legal costs if a member of the public sues your business because they’ve been injured or their property has been damaged, public indemnity insurance is highly recommended for all businesses. Many professions need to have p insurance as part of their respective industry body’s regulatory requirements and so always double check your contractual agreements.

Keep Reading

Covering compensation payments and legal costs if a member of the public sues your business because they've been injured or their property has been damaged, public indemnity insurance is highly recommended for all businesses. Many professions need to have p insurance as part of their respective industry body's regulatory requirements and so always double check your contractual agreements.

Covering legal costs and expenses in your defence as well as any damages or costs that may be awarded, professional indemnity insurance comes highly recommended for those providing professional services. Many professions need to have professional indemnity insurance as part of their respective industry body’s regulatory requirements and so always double check your contractual agreements.

Keep Reading

Covering legal costs and expenses in your defence as well as any damages or costs that may be awarded, professional indemnity insurance comes highly recommended for those providing professional services. Many professions need to have professional indemnity insurance as part of their respective industry body's regulatory requirements and so always double check your contractual agreements.

There are several types of insurance that a contractor may benefit from. These policies are known as:

Professional Indemnity Insurance - in case a client sues for making a costly mistake whilst undertaking contractual duties such as the loss of data or unintentional breach of copyright.

Public Liability Insurance - in case a member of the public is injured, or property is damaged as a result of the actions of the company (or its employees).

Employers Liability Insurance - in case an employee is injured (or worse) whilst working for the company. Often mandatory for any company's that has more than one working employee.

Keep Reading

There are several types of insurance that a contractor may benefit from. These policies are known as:

Professional Indemnity Insurance - in case a client sues for making a costly mistake whilst undertaking contractual duties such as the loss of data or unintentional breach of copyright.

Public Liability Insurance - in case a member of the public is injured, or property is damaged as a result of the actions of the company (or its employees).

Employers Liability Insurance - in case an employee is injured (or worse) whilst working for the company. Often mandatory for any company's that has more than one working employee.

As a contractor working through your own limited company, it is recommended that you are covered by business insurances whether that be for your own peace of mind or in fact something that is mandatory in your contract.

Keep Reading

As a contractor working through your own limited company, it is recommended that you are covered by business insurances whether that be for your own peace of mind or in fact something that is mandatory in your contract.

Do Contractors Need Insurance?

As a contractor in the UK, you will need to consider the importance of insurance. Insurance is a vital part of any business, and it is essential that you understand the different types of insurance available and how they can protect you and your business.

Contractors are usually self-employed individuals who provide services to other businesses or individuals. As such, they can be exposed to a variety of risks, such as property damage, legal liability, and employee injury. Insurance can provide financial protection against these risks, as well as cover any legal costs that may arise.

The most common type of insurance for contractors is public liability insurance. This type of insurance covers any legal costs, damages, or compensation that may be awarded to a third party if you are found to be liable for an incident. It is important to note that public liability insurance does not cover any damage to your own property or any injuries to yourself or your employees.

Employers’ liability insurance is another type of insurance that is important for contractors. This type of insurance covers any costs associated with legal claims made by employees who have been injured or become ill as a result of their work. It is important to note that employers’ liability insurance is a legal requirement for any business that has employees, and failure to have this in place can result in serious penalties.

Professional indemnity insurance is also important for contractors. This type of insurance covers any legal costs or compensation that may be awarded to a third party if you are found to be liable for a professional mistake. This type of insurance is particularly important for contractors who provide services such as accounting, legal advice, or IT support, as they are more likely to be held liable for any mistakes they make.

Finally, it is important to consider the need for business interruption insurance. This type of insurance covers any losses that may be incurred if your business is unable to operate due to an unforeseen event, such as a fire or natural disaster. This type of insurance can be particularly important for contractors, as it can ensure that they are able to continue to operate their business even if they are unable to work due to an unexpected event.

In conclusion, it is clear that insurance is an important consideration for contractors in the UK. Public liability insurance, employers’ liability insurance, professional indemnity insurance, and business interruption insurance are all important types of insurance that can provide financial protection and peace of mind for contractors. It is therefore essential that all contractors understand the different types of insurance available and ensure that they have the right cover in place for their business.

As an employee, you pay your taxes via Pay-as-You-Earn (PAYE). 

Through the system, income tax and Class 1 National Insurance contributions (NICs) are deducted from your salary before you receive it. Your employer will pay Class 1 NICs of 13.8% on salary you earn above the secondary threshold (£8,840 per annum for the 2020/21 tax year).

If you're contracting through an umbrella company, there won't be changes in how you pay your taxes. Just like permanent employees, your taxes are paid through PAYE.

How you pay your taxes changes if you choose to contract through your limited company. Here are the different taxes you need to be aware of:

  • Corporation tax: Tax levied on your company’s profits. The corporation tax rate is 19% for the 2021/22 tax year
  • Income tax: As a limited company director, you may need to pay taxes on the salary and dividends you draw from your business. We cover dividend taxes in greater detail in our guides on understanding dividend taxes and taxes, rates and allowances you need to know.  
  • National Insurance contributions: Limited company directors may also be classed as employees. If you’re paid a salary over the lower profits limit, you’ll have to pay Class 1 NICs as an employee. The company will also pay Class 1 employer’s NICs on salaries the directors receive.
  • VAT: Depending on your turnover, you may need to register and pay VAT.
Keep Reading

The biggest change when working as a contractor compared with say working as an employee is that you will become a lot more aware of the taxes you are paying. This because contractors have a lot more control over their finances and taxes with the added responsibility of making sure this is paid correctly and on time.

The P11D is a tax form that records benefits in kind that employees and directors of a company have received across the year. The information provided enables HMRC to figure out if you're required to pay tax on these benefits.

Keep Reading

The P11D is a tax form that records benefits in kind that employees and directors of a company have received across the year. The information provided enables HMRC to figure out if you're required to pay tax on these benefits.

As a contractor running your own limited company, you need to be aware of the following deadlines:

  • File end of year accounts to Companies House:  9 months after your company year ends. If it is your first year, the due date will be 21 months from the date your company was incorporated.
  • File your confirmation statement: This is due on the anniversary of incorporation each year
  • File your corporation tax return: This is due 12 months from your company year end.
  • Pay your corporation tax bill: Payment is due 9 months and 1 day after the end of the company year
  • PAYE RTI (Real Time Information) Returns: A submission of your company payroll has to be submitted in real time each month to HMRC. This is due on or before the intended salary payment. Any tax due from this can be payable on a quarterly or monthly basis as follows:
  • the 22nd of the next tax month if you pay monthly
  • the 22nd after the end of the quarter if you pay quarterly
  • VAT returns: Usually submitted on a quarterly basis, the company VAT is due to be filed and paid within 1 month and 7 days from the quarter end.
  • Self Assessment tax returns: Your Self Assessment Tax Return is always due to be filed by the following 31st January after the end of the tax year. This date is also the same deadline for payment of any tax due but you may also have a payment on account due by 31st July after this.
  • P11D: The submission of the company P11D will need to made by 6th July with any payment of National Insurance arising due by 19th July (22nd if paid electronically)
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As a contractor running your own limited company, you need to be aware of the following deadlines:

  • File end of year accounts to Companies House: 9 months after your company year ends. If it is your first year, the due date will be 21 months from the date your company was incorporated.
  • File your confirmation statement: This is due on the anniversary of incorporation each year
  • File your corporation tax return: This is due 12 months from your company year end.
  • Pay your corporation tax bill: Payment is due 9 months and 1 day after the end of the company year
  • PAYE RTI (Real Time Information) Returns: A submission of your company payroll has to be submitted in real time each month to HMRC. This is due on or before the intended salary payment. Any tax due from this can be payable on a quarterly or monthly basis as follows:
  • the 22nd of the next tax month if you pay monthly
  • the 22nd after the end of the quarter if you pay quarterly
  • VAT returns: Usually submitted on a quarterly basis, the company VAT is due to be filed and paid within 1 month and 7 days from the quarter end.
  • Self Assessment tax returns: Your Self Assessment Tax Return is always due to be filed by the following 31st January after the end of the tax year. This date is also the same deadline for payment of any tax due but you may also have a payment on account due by 31st July after this.
  • P11D: The submission of the company P11D will need to made by 6th July with any payment of National Insurance arising due by 19th July (22nd if paid electronically)

A contractor working through their own limited company can pay themselves by drawing dividends and a salary.

There are a few factors that need to be considered when deciding the best way to go about this. For example, if your contract is deemed to fall inside IR35, you will be restricted to paying yourself a salary.

On the other hand, if your contract falls outside of IR35, you'll then have the option of drawing a salary and dividends to maximise tax efficiency.

If you're contracting through an umbrella company, you'll receive a salary from your provider (similar to how you'll be paid if you were a permanent employee).

Additional resources:

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A contractor working through their own limited company can pay themselves through a couple of ways such as paying a salary and paying dividends. There are a few factors that need to be considered when deciding the best way to go about this.

For example, when operating inside IR35, contractors will be restricted to paying themselves a salary however when operating outside IR35 the doors are opened to maximise tax efficiencies.

As a contractor, there are a vast number of different expenses that can be claimed for when working through a limited company.

These expenses must be deemed wholly, exclusively and necessary for business to carry out it's duties and some examples can include:

  • Travel
  • Food (subsistence)
  • Accommodation
  • Computer & office equipment
  • Postage & Stationery
  • Accountancy, legal & professional fees
  • Business insurance
  • Marketing
  • Subscription
  • Telephone & internet

Further information is available on our limited company expenses and tax allowances guide.

If you're working through an umbrella company, the types of expenses you can claim for may include:

  • Client billable expenses
  • Business costs
  • Non-client billable expenses

If you're subject to the SDC legislation, you won't be able to claim for home-to-work travel and subsistence expenses. Find out more in our guide to umbrella contractor expenses.

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As a contractor, there are a vast number of different expenses that can be claimed for when working through a limited company.

These expenses must be deemed wholly, exclusively and necessary for business to carry out it's duties and some examples can include:

  • Travel
  • Food (subsistence)
  • Accommodation
  • Computer & office equipment
  • Postage & Stationery
  • Accountancy & professional fee's
  • Insurance
  • Telephone & internet

Software can go a long way in assisting businesses and accountants alike. Often an accountant will have a preferred software that they use which could be something bespoke they have developed themselves or something they love and trust off of the shelves.

Our accountants at Forma have tried and tested many different solutions with FreeAgent being the clear winner in the contractor accounting tool.

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Software can go a long way in assisting businesses and accountants alike. Often an accountant will have a preferred software that they use which could be something bespoke they have developed themselves or something they love and trust off of the shelves.

Our accountants at Forma have tried and tested many different solutions with FreeAgent being the clear winner in the contractor accounting tool.

Like with all service offerings, you can find contractor accountants at pretty much every price point. Some accountants will charge by the hour, some by piece of work or like ourselves, will offer a fixed monthly fee covering everything you will need in one clear package.

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Like with all service offerings, you can find contractor accountants at pretty much every price point. Some accountants will charge by the hour, some by piece of work or like ourselves, will offer a fixed monthly fee covering everything you will need in one clear package.

The goals for accountant's is to help businesses with tax and compliance duties whilst providing strategic advice to save money and time, allowing the business to focus on it's core activities.

Everyone knows that accountants will complete tax returns and accounts but the very best accountants will go one step further in ensuring the very best for the business.

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The goals for accountant's is to help businesses with tax and compliance duties whilst providing strategic advice to save money and time, allowing the business to focus on it's core activities.

Everyone knows that accountants will complete tax returns and accounts but the very best accountants will go one step further in ensuring the very best for the business.

To set up a limited company, you need to take the following steps:

  • Decide what kind of limited company you need
  • Choose a business name
  • Choose how to set up your limited company
  • Complete the company formation process
  • Open a business bank account
  • Inform your stakeholders
  • Get your VAT registration or transfer sorted out
  • Set up your payroll
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To set up a limited company, you need to take the following steps:

  • Decide what kind of limited company you need
  • Choose a business name
  • Choose how to set up your limited company
  • Complete the company formation process
  • Open a business bank account
  • Inform your stakeholders
  • Get your VAT registration or transfer sorted out
  • Set up your payroll

Let’s compare the advantages and drawbacks of setting up a limited company VS working through an umbrella company.

Why set up a limited company?

  • Limited liability
  • Tax efficiencies
  • Increased credibility

Why not set up a limited company?

  • Increased legal and administrative requirements
  • Less privacy; details of the company are publicly available

Why work through an umbrella company?

  • Ease of use
  • Flexibility
  • Entitled to statutory benefits

Why not work through an umbrella company?

  • Costly way to operate
  • Lack of control
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Let's compare the advantages and drawbacks of setting up a limited company VS working through an umbrella company.

Why set up a limited company?

  • Limited liability
  • Tax efficiencies
  • Increased credibility

Why not set up a limited company?

  • Increased legal and administrative requirements
  • Less privacy; details of the company are publicly available

Why work through an umbrella company?

  • Ease of use
  • Flexibility
  • Entitled to statutory benefits

Why not work through an umbrella company?

  • Costly way to operate
  • Lack of control

There is no clear cut time as to when you should start working through your own limited company. With other routes available—such as operating as a sole trader, or working through an umbrella company—it is always worth weighing up what is best for you and your circumstances.

With that being said, if you plan to work as an independent contractor for the foreseeable future, opening your own limited company at the early stages can maximise your opportunities for reaping the benefits of having your own company straight away.

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There is no clear cut time as to when you should start working through your own limited company. With other routes available-such as operating as a sole trader, or working through an umbrella company-it is always worth weighing up what is best for you and your circumstances.

With that being said, if you plan to work as an independent contractor for the foreseeable future, opening your own limited company at the early stages can maximise your opportunities for reaping the benefits of having your own company straight away.

The drawbacks to working through an umbrella company are:

  • You’ll have less control compared to running your own company.
  • You may find it more tax efficient to operate through a limited company.
  • There are a number of umbrella companies operating illegal arrangements, so you’ll need to exercise caution before signing a contract.
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The drawbacks to working through an umbrella company are:

  • You'll have less control compared to running your own company.
  • You may find it more tax efficient to operate through a limited company.
  • There are a number of umbrella companies operating illegal arrangements, so you'll need to exercise caution before signing a contract.

The advantages to working through an umbrella company include:

  • You’ll deal with less administrative work. It’s also quicker and easier to join an umbrella company, compared to setting up your own limited company.
  • As an employee of the umbrella company, you’re entitled to statutory benefits
  • It can be a great option for short term contractors, as they won’t have to go through the hassle of setting up a limited company and making the arrangements for it to be dissolved.
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The advantages to working through an umbrella company include:

  • You'll deal with less administrative work. It's also quicker and easier to join an umbrella company, compared to setting up your own limited company.
  • As an employee of the umbrella company, you're entitled to statutory benefits
  • It can be a great option for short term contractors, as they won't have to go through the hassle of setting up a limited company and making the arrangements for it to be dissolved.

An umbrella company is an organisation that employs contractors working on fixed-term contracts. It acts as an intermediary between the contractor and their end client or recruitment agency.

The umbrella company provider will handle accountancy, administration, taxation matters and manage the payroll.

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An umbrella company is an organisation that employs contractors working on fixed-term contracts. It acts as an intermediary between the contractor and their end client or recruitment agency.

The umbrella company provider will handle accountancy, administration, taxation matters and manage the payroll.

There are a few steps you'll need to consider with hiring contractors. These include:

  • Sourcing for contractors
  • Assessing contractor CVs
  • Interviewing a contractor
  • Payments
  • Contract terms
  • Terminating a contract
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There are a few steps you'll need to consider with hiring contractors. These include:

  • Sourcing for contractors
  • Assessing contractor CVs
  • Interviewing a contractor
  • Payments
  • Contract terms
  • Terminating a contract

There are various ways to land a contractor job.

You may work through an umbrella company or recruitment agency, use a contractor job board or consulting platform, build up your social media profile (creating a top 1% LinkedIn profile can increase your chances of getting approached for contracting opportunities), generate leads through your own website and more.

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There are various ways to land a contractor job.

You may work through an umbrella company or recruitment agency, use a contractor job board or consulting platform, build up your social media profile (creating a top 1% LinkedIn profile can increase your chances of getting approached for contracting opportunities), generate leads through your own website and more.

The disadvantages of contracting are:

  • Uncertainty: Due to the flexible nature of their working relationships, contractors aren’t guaranteed work after the end of assignment or project.
  • Responsibility: Not only is it the responsibility of the contractor to find work, they are also responsible for their own finances.
  • Employment rights: As a contractor, you generally wouldn't find yourself holding employment rights that permanent employees benefit from.
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Working as an independent contractor has become increasingly popular in today's job market - in large part because being a contract worker usually means having more flexibility and accessing a higher pay.

However, before you dive into the world of contracting, it's important to consider the differences between permanent and contract employees, and the potential downsides of this choice.

The main disadvantages of contracting include:

  • Uncertainty: Due to the flexible nature of their working relationships, contract workers aren't guaranteed work after the end of assignment or project.
  • Responsibility: Not only is it the responsibility of the contractor to find work, they are also responsible for their own finances.
  • Employment rights: As a contractor, you generally wouldn't find yourself holding employment rights that permanent workers benefit from.

So, it's vital to understand these drawbacks, you you can make more informed decisions when considering contracting as a career path.

What's the Difference Between Permanent Employment and Contract Work?

Being a permanent employee and contracting are two distinct types of work arrangements. As such, there are several differences in terms of employment status, contractual obligations, and long-term commitment.

Permanent Workers

In permanent employment, individuals are hired by a company as full-time employees and enter into an employment contract. They typically work for a single employer on an ongoing basis, with a more stable and long-term commitment.

Permanent employees can receive benefits such as paid vacation, sick leave, health insurance, retirement plans, and other employment perks. They also have a consistent salary or wage, often receive training and career development opportunities, and are subject to the company's policies and regulations.

Contracting

Contracting (as a freelancer or a self-employed person) involves working on a project or assignment basis for a specific period.

Contract workers are not employees of the hiring company but rather work as independent entities or through an intermediary such as an umbrella company. They sign contracts or agreements for specific projects or timeframes, and their work is often result-oriented or based on deliverables. In some cases (though not all), a contractor can work on multiple contracts at the same time - thus potentially making more money.

Contractors are responsible for their own taxes, insurance, and other business expenses. They have more flexibility in choosing projects, setting their rates, and managing their working hours. However, contractors typically do not receive employee benefits, sick pay, or annual leave, and are not entitled to the same level of job security as permanent employees.

In many cases, self employed people who want to remain their own boss go on to starting a limited company.

Making The Choice

Permanent employment provides stability, benefits, and long-term commitment, while being a contract worker can offer flexibility, autonomy, and a project-based work structure.

Many contractors feel that autonomy and flexibility (two of the main contracting advantages) are more important than the downsides, as you get greater control as a self-employed person than being an employee. However, it's important to keep in mind that contracting also involved many potential disadvantages, including job insecurity, lack of benefits, and limited employment rights.

The choice between the two will ultimately depend on individual preferences, career goals, and the desired balance between stability and independence.

The advantages of contracting are:

  • Flexibility: Contractors have a lot more control over their work life often deciding when they work, where they work and how they work
  • Increased earnings: Contractors are often paid more due to their skillset and the flexible nature of their working relationships. Additionally, contractors who operate through their own limited company can benefit from tax efficiencies.
  • Greater development: Often working with multiple clients throughout their career, contractors are exposed to a lot of opportunities to develop their skills and build on their experience in their area of expertise.
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The advantages of contracting are:

  • Flexibility: Contractors have a lot more control over their work life often deciding when they work, where they work and how they work
  • Increased earnings: Contractors are often paid more due to their skillset and the flexible nature of their working relationships. Additionally, contractors who operate through their own limited company can benefit from tax efficiencies.
  • Greater development: Often working with multiple clients throughout their career, contractors are exposed to a lot of opportunities to develop their skills and build on their experience in their area of expertise.

To become a contractor, you need to:

  • Do your research: The first step you’ll need to do is to conduct in-depth research, and think through various important factors—from finances and tax implications, to lifestyle and business opportunities—to ascertain if becoming a contractor is the right decision for you.
  • Decide on how you’ll operate: As a contractor, you may operate as a sole trader, through your own limited company, or work with an umbrella company or recruitment agency.
  • Develop a business strategy: Strategic planning isn’t set in stone—but working out a plan is still helpful, as it is a way for you to consider multiple perspectives, identify potential opportunities and pitfalls and conceptualise back up plans you could fall back on.
  • Get your business finances and insurance sorted out: Setting up a business bank account, registering a company, determining the level of accounting support you need and investing in business insurance are important aspects you need to sort out before you begin contracting.
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To become a contractor, you need to:

  • Do your research: The first step you'll need to do is to conduct in-depth research, and think through various important factors-from finances and tax implications, to lifestyle and business opportunities-to ascertain if becoming a contractor is the right decision for you.
  • Decide on how you'll operate: As a contractor, you may operate as a sole trader, through your own limited company, or work with an umbrella company or recruitment agency.
  • Develop a business strategy: Strategic planning isn't set in stone-but working out a plan is still helpful, as it is a way for you to consider multiple perspectives, identify potential opportunities and pitfalls and conceptualise back up plans you could fall back on.
  • Get your business finances and insurance sorted out: Setting up a business bank account, registering a company, determining the level of accounting support you need and investing in business insurance are important aspects you need to sort out before you begin contracting.

Contractors can be self-employed, a worker or an employee. Those who are employed through an umbrella company or an agency could be considered a worker or an employee.

If a contractor is a sole trader or runs a limited company, he or she will then be considered a self-employed person.

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Contractors can be self-employed, a worker or an employee. Those who are employed through an umbrella company or an agency could be considered a worker or an employee.

If a contractor is a sole trader or runs a limited company, he or she will then be considered a self-employed person.

Contractors can be self-employed, a worker or an employee. Those who are employed through an umbrella company or an agency could be considered a worker or an employee.

If a contractor is a sole trader or runs a limited company, he or she will then be considered a self-employed person.

Keep Reading

Contractors can be self-employed, a worker or an employee. Those who are employed through an umbrella company or an agency could be considered a worker or an employee.

If a contractor is a sole trader or runs a limited company, he or she will then be considered a self-employed person.

An independent contractor is an individual who is engaged in a work agreement with a company or entity as a non-employee.

Factors that identify an independent contractor are:

  • They have a greater degree of control over their work
  • They offer a special skill set
  • They are able to get a replacement
  • They aren’t entitled to employment benefits
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An independent contractor is an individual who is engaged in a work agreement with a company or entity as a non-employee.

Factors that identify an independent contractor are:

  • They have a greater degree of control over their work
  • They offer a special skill set
  • They are able to get a replacement
  • They aren't entitled to employment benefits

There are different types of contractor jobs available across diverse sectors. Contractors may be hired to perform services such as:

  • Marketing
  • IT maintenance and support
  • Graphic design
  • Recruitment
  • Business development
  • Catering
  • Construction work
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There are different types of contractor jobs available across diverse sectors. Contractors may be hired to perform services such as:

  • Marketing
  • IT maintenance and support
  • Graphic design
  • Recruitment
  • Business development
  • Catering
  • Construction work

A contractor is a professional that provides skills and services to a specific client under set terms. The terms can be for a set number of hours, a certain time frame or duration of a project.

A contractor is responsible for their own dealings and has discretion over the work they carry out.

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A contractor is a professional that provides skills and services to a specific client under set terms. The terms can be for a set number of hours, a certain time frame or duration of a project.

A contractor is responsible for their own dealings and has discretion over the work they carry out.

IR35 is a piece of legislation which allows HMRC to treat private contractors as if they were employees.

It was introduced to combat the problem of "disguised employment", where employees offer their services via limited companies to pay less tax and National Insurance.

As a contractor, there are various key aspects you need to understand about IR35. These are:

  • What you need to do to structure your contracts and working arrangements such that they fall outside of IR5
  • April 2020-2021 IR35 reform
  • FAQs relating to the IR35 reform, and what you can do to prepare for the upcoming changes

We've elaborated on these points in detail in our IR35 guide.

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IR35 is a piece of legislation which allows HMRC to treat private contractors as if they were employees.

It was introduced to combat the problem of "disguised employment", where employees offer their services via limited companies to pay less tax and National Insurance.

As a contractor, there are various key aspects you need to understand about IR35. These are:

  • What you need to do to structure your contracts and working arrangements such that they fall outside of IR5
  • April 2020-2021 IR35 reform
  • FAQs relating to the IR35 reform, and what you can do to prepare for the upcoming changes

We've elaborated on these points in detail in our IR35 guide.

The United Kingdom left the European Union on 31 January 2020. In 2020, the EU and the UK reached an agreement on their new partnership. It sets out the rules that apply between the EU and the UK as of 1 January 2021. 

The rules cover aspects such as travel and border controls, trade in services, trade in goods, fair competition, social security, the transfer of personal data and more—a number of which may significantly impact contractors and independent consultants working in Europe and the UK.

In our article, we take a closer look at the key areas in which contractors and consultants will be affected:

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The United Kingdom left the European Union on 31 January 2020. In 2020, the EU and the UK reached an agreement on their new partnership. It sets out the rules that apply between the EU and the UK as of 1 January 2021.

The rules cover aspects such as travel and border controls, trade in services, trade in goods, fair competition, social security, the transfer of personal data and more-a number of which may significantly impact contractors and independent consultants working in Europe and the UK.

In our article, we take a closer look at the key areas in which contractors and consultants will be affected:

When you work through an umbrella company, there are a few types of expenses you may be able to claim for:

Client billable expenses

These expenses are agreed upon prior to the engagement, and are paid for by the end client or agency. 

Business costs

Business costs are expenses that are necessary for the performance of your work. 

Examples include professional materials (such as textbooks and manuals), training costs, protective clothing, business equipment, computer software, mileage, parking fees and more. These will be reimbursed tax and NICs free by your umbrella company. 

Non-client billable business expenses

These expenses won’t be reimbursed by the end client or agency, but can be claimed as allowable expenses from HMRC—provided that the expenses are incurred “wholly, exclusively and necessarily” in the performance of your work. 

Here are some examples of allowable expenses you can claim for: 

  • Mileage
  • Professional subscriptions
  • Protective clothing
  • Stationery, postage, phone and internet 
  • Business entertainment
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When you work through an umbrella company, there are a few types of expenses you may be able to claim for:

Client billable expenses

These expenses are agreed upon prior to the engagement, and are paid for by the end client or agency.

Business costs

Business costs are expenses that are necessary for the performance of your work.

Examples include professional materials (such as textbooks and manuals), training, electronic equipment and parking fees. These will be reimbursed tax and NICs free by your umbrella company.

Non-client billable business expenses

These expenses won't be reimbursed by the end client or agency, but can be claimed as allowable expenses from HMRC-provided that the expenses are incurred "wholly, exclusively and necessarily" in the performance of your work.

Here are some examples of allowable expenses you can claim for:

  • Mileage
  • Professional subscriptions
  • Protective clothing
  • Stationery, postage, phone and internet
  • Business entertainment

Whether you’re newly self-employed or an experienced contractor, there’ll be aspects that you need more information on when you’re deciding if working through an umbrella company is right for you. 

To help you along, we’ve compiled a list of FAQs that contractors often ask:

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Whether you're newly self-employed or an experienced contractor, there'll be aspects that you need more information on when you're deciding if working through an umbrella company is right for you.

To help you along, we've compiled a list of FAQs that contractors often ask:

An umbrella company is an organisation that employs contractors working on fixed-term contracts. It acts as an intermediary between the contractor and their end client or recruitment agency. 

Accountancy, administration and taxation matters are handled by an umbrella company provider. As such, when you work through an umbrella company, you won’t need to take on the responsibilities that come with running a limited company.

Your provider will also manage the payroll. They will collect the payment for the work you’ve completed from the end client or your recruitment agency. You’ll then be paid through PAYE, with your taxes, National Insurance contributions and pension payments being deducted at source.

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An umbrella company is an organisation that employs contractors working on fixed-term contracts. It acts as an intermediary between the contractor and their end client or recruitment agency.

The umbrella company provider will handle accountancy, administration and taxation matters. As such, when you work through an umbrella company, you won't need to take on the responsibilities that come with running a limited company.

They'll also manage the payroll. The umbrella company will collect the payment for the work you've completed from the end client or your recruitment agency. You'll then be paid through PAYE, and your taxes, National Insurance contributions and pension payments will be deducted at source.

As a self-employed person—whether you’re running a full-time freelance gig, or hustling on the side—you’ll need to think about the risks you face and whether business insurance could be a good idea.

In this article, our business insurance partner, Superscript, explains the covers you may want to consider getting.

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As a self-employed person-whether you're running a full-time freelance gig, or hustling on the side-you'll need to think about the risks you face and whether business insurance could be a good idea.

In this article, our business insurance partner, Superscript, explains the covers you may want to consider getting.

Firstly, we'll start with the services that we provide which covers the critical things you'll need to start and operate your contracting business.

For those just getting started, we provide free company registration on Companies House. This is typically done within 24 hours of submitting your details to Forma. It can take under 5 minutes to provide all your details and we'll just need a proof of ID and proof of address for each of the company directors.

We cover all of your key company filing requirements like annual accounts, confirmation statements, corporation tax and ensuring you meet all filing deadlines.

We also help with your annual Self Assessment which is a requirement for all company directors.

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Firstly, we'll start with the services that we provide which covers the critical things you'll need to start and operate your contracting business.

For those just getting started, we provide free company registration on Companies House. This is typically done within 24 hours of submitting your details to Forma. It can take under 5 minutes to provide all your details and we'll just need a proof of ID and proof of address for each of the company directors.

We cover all of your key company filing requirements like annual accounts, confirmation statements, corporation tax and ensuring you meet all filing deadlines.

We also help with your annual Self Assessment which is a requirement for all company directors.

Business insurance is designed to protect you from the risks associated with running a business.

As a business owner, whether you’re a sole trader, or running a partnership or a limited company, the onus is on you to think about the risks you face as a business—and to get them covered. 

While some risks and their accompanying covers are common to most businesses, others are more niche.

The protection you’ll need will depend on the risks your business faces. In this article, our business insurance partner, Superscript explains the types of business insurance you may want to consider.

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Business insurance is designed to protect you from the risks associated with running a business.

As a business owner, whether you're a sole trader, or running a partnership or a limited company, the onus is on you to think about the risks you face as a business-and to get them covered.

While some risks and their accompanying covers are common to most businesses, others are more niche.

The protection you'll need will depend on the risks your business faces. In this article, our business insurance partner, Superscript explains the types of business insurance you may want to consider.

So, you’re thinking of becoming a contractor.

There’s probably one of three reasons driving this:

You’ve received a Job Offer 

You’ve just received a job offer, and now need to decide on whether to set up a limited company, umbrella company or become a sole trader (or you may not have the choice in deciding).

You’re in the right place. 

This guide will walk you through the best company structure for you, accounting support, VAT, business services you need to consider and finding new opportunities.

You want to increase your pay

You’d like to increase your pay by switching from permanent roles to interim/ contractor roles.

Contracting can be very lucrative.

You’ll need to be comfortable with a certain level of risk (short notice periods), increased monthly admin (as a Limited Company) and less benefits than being an employee (paid leave, sick days).

However, you’ll earn more, get greater flexibility and hopefully grow a consulting business.

Project Flexibility

Getting multiple requests for your services? Amazing.

Setting yourself up as a contractor through a Limited Company means you can start expanding your client base rapidly and work on different projects a few days a week.

You can still set this up as a current PAYE employee of a company, and this can be a great stepping stone to launching your own business.

Let's talk about the right business structure for you.

Keep Reading

So, you're thinking of becoming a contractor.

There's probably one of three reasons driving this:

You've received a Job Offer

You've just received a job offer, and now need to decide on whether to set up a limited company, umbrella company or become a sole trader (or you may not have the choice in deciding).

You're in the right place.

This guide will walk you through the best company structure for you, accounting support, VAT, business services you need to consider and finding new opportunities.

You want to increase your pay

You'd like to increase your pay by switching from permanent roles to interim/ contractor roles.

Contracting can be very lucrative.

You'll need to be comfortable with a certain level of risk (short notice periods), increased monthly admin (as a Limited Company) and less benefits than being an employee (paid leave, sick days).

However, you'll earn more, get greater flexibility and hopefully grow a consulting business.

Project Flexibility

Getting multiple requests for your services? Amazing.

Setting yourself up as a contractor through a Limited Company means you can start expanding your client base rapidly and work on different projects a few days a week.

You can still set this up as a current PAYE employee of a company, and this can be a great stepping stone to launching your own business.

Let's talk about the right business structure for you.

When you get into contracting, it can get stressful when your project end date is just around the corner and you haven’t secured your next role. This amps up even more once you finish a contract and you’re looking for your next gig.

As a specialist contractor accounting business founded by contractors, one of the key questions we get asked is about where to find roles. So, we decided to compile a list of some of the best contractor job portals, platforms, recruiters and consultancies.

If you have anything else to add then please let us know at info@goforma.com.

Keep Reading

When you get into contracting, it can get stressful when your project end date is just around the corner and you haven't secured your next role. No matter how many contract jobs you have successfully completed in the past, this will inevitably happen every time you approach the end of your project.

Of course, this amps up even more once you finish the contract and you have to start looking for your next gig.

As a specialist contractor accounting business founded by contractors, one of the key questions we get asked is about where to find contract jobs and roles (and how to ensure you are a successful candidate). So, we decided to compile a list of some of the best contractor job portals, platforms, recruiters and consultancies in the city of London and the whole of the United Kingdom.

If you have anything else to add then please let us know at info@goforma.com.

Keep Reading

We pride ourselves on providing an unparalleled level of support that will make you feel valued, eliminate your admin and ensure you're being as tax efficient as possible.

VAT registration & filing

We'll registered your company for VAT, and ensure VAT is always filed well ahead of the deadline. We will ask you to confirm that you're happy for us to automatically file your VAT without having to approve it which will ensure that we can get this filed as soon as possible.

We'll also help you get setup with a Direct Debit for HMRC so that you can make your VAT payments automatically without having to manually do this every quarter. This saves you time and the stress of ensuring you've paid on time, and importantly will make sure you don't have to pay a penalty for a missed deadline.

Annual accounts

We aim to complete your annual accounts well ahead of schedule to ensure you have complete financial records.

Corporation tax

You should never have to guess how much corporation tax is due. We'll make sure you know how much is due and when it's due.

Confirmation statement

We'll make sure to keep your Companies House account up to date and ensure your confirmation statement is filed on time.

Self assessment

We include a Self Assessment with our operate and grow packages and this is also available as an additional £99+VAT one-off charge.

Tax efficiency

From your salary, dividends, pension, investments and company expenses, we'll help you optimise your tax.

Keep Reading

We pride ourselves on providing an unparalleled level of support that will make you feel valued, eliminate your admin and ensure you're being as tax efficient as possible.

VAT registration & filing

We'll registered your company for VAT, and ensure VAT is always filed well ahead of the deadline. We will ask you to confirm that you're happy for us to automatically file your VAT without having to approve it which will ensure that we can get this filed as soon as possible.

We'll also help you get setup with a Direct Debit for HMRC so that you can make your VATpayments automatically without having to manually do this every quarter. This saves you time and the stress of ensuring you've paid on time, and importantly will make sure you don't have to pay a penalty for a missed deadline.

Annual accounts

We aim to complete your annual accounts well ahead of schedule to ensure you have complete financial records.

Corporation tax

You should never have to guess how much corporation tax is due. We'll make sure you know how much is due and when it's due.

Confirmation statement

We'll make sure to keep your Companies House account up to date and ensure your confirmation statement is filed on time.

Self assessment

We include a Self Assessment with our operate and grow packages and this is also available as an additional £99+VAT one-off charge.

Tax efficiency

From your salary, dividends, pension, investments and company expenses, we'll help you optimise your tax.

Free consultations

One of the first things you could be doing is providing some free advice/ consultations to any previous clients.

It could be framed as a general catch up and used as a way to share your thoughts on what’s going on in the industry and how you expect things to shape it. If they have any input that’s useful on a project they’re working then it’s a great opportunity to re-engage with an old client and possibly find avenues of opportunity.

To eliminate the back and forth of scheduling a meeting/ free consultation we’d recommend Meeting Bird which is completely free.

Create a Profile on Talmix

Talmix provides a range of global opportunities for consultants and specialists that can range for a day or two up to 12 month projects. With a network of more than 40,000 specialists, there are a range of opportunities.

The sign-up process is pretty straight forward and you can browse through projects right away.

Move Me On Profile

Move Me On has an impressive array of clients they can boast about from Amex, Nike, Shell, L.E.K and Hello Fresh, they offer roles that typically require quite a few years experience. The minimum role they hire for is a senior analyst for £400/day.

Create an expert profile on Catalant

Catalant works with 30% of the top Fortune 100 companies. It’s an interesting proposition that combines software with experts to ensure that strategy is executed.

Sign up to Toptal

Toptal’s claim is that they only hire the top 3% of all freelancers.

They have an impressive array of clients such as Airbnb, Shopify and Bridgestone and hire into Finance, Project Management, Product Managers, Developers and also build their own consulting teams.

Upwork

You’ve probably heard of Upwork before. We’ve used it ourselves to hire a range of different talent and skill sets can vary quite considerably.

They have categories for Accounting & Consulting, Data Science & Analytics, Engineering & Architecture and IT & Networking to name a few.

Add your slide decks to online marketplaces

Feeling confident in your slide design?

There are a few online resources where people can download slide templates from and one of the best is Envato.

Create a SkillShare class

It seems like SkillShare advertises on every other YouTube video, but what you can be sure of is that they drive a huge volume of traffic to their website and have a variety of learning categories that people can explore.

If you have a skill or interest that you feel comfortable to share then become a teacher on SkillShare. To set expectations, it’s unlikely that this will become a major income stream in the short term but it could turn into a good stream of side income.

Learn more about becoming a teacher.

Create an email newsletter

There are some really great newsletters out there and despite what some may say about email open rates. For example, Morning Brew made $13M last year through their newsletter alone. They made $3M the year before with only 10 staff.

With a free subscription to Mail Chimp, it’s pretty simple to implement this strategy as a way to engage potential customers.

For reference some of our favourite newsletters (and ones that could provide some inspiration) are:

  • Morning Brew offers hilarious breakdowns of big investments and finance news.
  • TL;DR sends out daily tech news.
  • CB Insights offers great commentary on M&A and industry verticals.

Create a Podcast

Podcasting revenue is likely to exceed $1bn in 2021.

Each week, more and more specialist shows emerge and creating a podcast can be a great way to rapidly build your network and connect with leading industry figures.

Make a list of all the customers you want to target & research

Now is a good time to take a step back and put together some really specialised insights on your potential customer target market.

Reach out to recruiters & work together 

Given the current circumstances, the recruitment industry (in most sectors) is likely to be under serious strain.

Reach out to any recruiters you’ve worked with in the past. Sure, see if they have any roles but you could offer to help them put together a project scope, provide any introductions to people you know or find a way that you can support them with some free consulting or advice.

It’s unlikely that you’ll generate any business in the short term, but supporting recruiters during this time will ensure that you’re one of the key people they think about for future roles.

Reach out to Chambers of Commerce/ LEPs to offer support

Contact your local Chamber of Commerce or Local Enterprise Partnership to understand what kind of support local businesses may be looking for.

This could be an opportunity for you to help support a struggling business within your community.

Add your business to Google My Business

Adding your consulting company to Google My Business is a great way to get your services seen in local searches.

Registration is simple. Add your business details and where you operate your business from and you’ll receive a postcard in a few working days with a code to confirm your account.

If you don’t have an office address that you can register from, you may use our address for only £12.50 a month (for a limited time) by signing up for our virtual office package.

Keyword research to understand your industry

You could use keyword research to understand search volumes and general interest in services in your industry/ consulting skills set.

The two best tools for this are:

Reach out to more junior colleagues you’ve worked with

If you’ve worked in projects with more junior colleagues who were also working as contractors then reach out to them.

For one, it’s good to support more junior people during this time. Additionally, they may be working on other projects or know people in their network they could refer you to.

Join Industry Associations

There are a broad range of industry associations that are likely to cater to your industry. There may be free online events, discounted memberships available or ways for you to try and test a membership before joining.

British Services offers a comprehensive list to browse by location and activity.

Keep Reading

Free consultations

One of the first things you could be doing is providing some free advice/ consultations to any previous clients.

It could be framed as a general catch up and used as a way to share your thoughts on what's going on in the industry and how you expect things to shape it. If they have any input that's useful on a project they're working then it's a great opportunity to re-engage with an old client and possibly find avenues of opportunity.

To eliminate the back and forth of scheduling a meeting/ free consultation we'd recommend Meeting Bird which is completely free.

Create a Profile on Talmix

Talmix provides a range of global opportunities for consultants and specialists that can range for a day or two up to 12 month projects. With a network of more than 40,000 specialists, there are a range of opportunities.

The sign-up process is pretty straight forward and you can browse through projects right away.

Move Me On Profile

Move Me On has an impressive array of clients they can boast about from Amex, Nike, Shell, L.E.K and Hello Fresh, they offer roles that typically require quite a few years experience. The minimum role they hire for is a senior analyst for £400/day.

Create an expert profile on Catalant

Catalant works with 30% of the top Fortune 100 companies. It's an interesting proposition that combines software with experts to ensure that strategy is executed.

Sign up to Toptal

Toptal's claim is that they only hire the top 3% of all freelancers.

They have an impressive array of clients such as Airbnb, Shopify and Bridgestone and hire into Finance, Project Management, Product Managers, Developers and also build their own consulting teams.

Upwork

You've probably heard of Upwork before. We've used it ourselves to hire a range of different talent and skill sets can vary quite considerably.

They have categories for Accounting & Consulting, Data Science & Analytics, Engineering & Architecture and IT & Networking to name a few.

Add your slide decks to online marketplaces

Feeling confident in your slide design?

There are a few online resources where people can download slide templates from and one of the best is Envato.

Create a SkillShare class

It seems like SkillShare advertises on every other YouTube video, but what you can be sure of is that they drive a huge volume of traffic to their website and have a variety of learning categories that people can explore.

If you have a skill or interest that you feel comfortable to share then become a teacher on SkillShare. To set expectations, it's unlikely that this will become a major income stream in the short term but it could turn into a good stream of side income.

Learn more about becoming a teacher.

Create an email newsletter

There are some really great newsletters out there and despite what some may say about email open rates. For example, Morning Brew made $13M last year through their newsletter alone. They made $3M the year before with only 10 staff.

With a free subscription to Mail Chimp, it's pretty simple to implement this strategy as a way to engage potential customers.

For reference some of our favourite newsletters (and ones that could provide some inspiration) are:

  • Morning Brew offers hilarious breakdowns of big investments and finance news.
  • TL;DR sends out daily tech news.
  • CB Insights offers great commentary on M&A and industry verticals.

Create a Podcast

Podcasting revenue is likely to exceed $1bn in 2021.

Each week, more and more specialist shows emerge and creating a podcast can be a great way to rapidly build your network and connect with leading industry figures.

Make a list of all the customers you want to target & research

Now is a good time to take a step back and put together some really specialised insights on your potential customer target market.

Reach out to recruiters & work together

Given the current circumstances, the recruitment industry (in most sectors) is likely to be under serious strain.

Reach out to any recruiters you've worked with in the past. Sure, see if they have any roles but you could offer to help them put together a project scope, provide any introductions to people you know or find a way that you can support them with some free consulting or advice.

It's unlikely that you'll generate any business in the short term, but supporting recruiters during this time will ensure that you're one of the key people they think about for future roles.

Reach out to Chambers of Commerce/ LEPs to offer support

Contact your local Chamber of Commerce or Local Enterprise Partnership to understand what kind of support local businesses may be looking for.

This could be an opportunity for you to help support a struggling business within your community.

Add your business to Google My Business

Adding your consulting company to Google My Business is a great way to get your services seen in local searches.

Registration is simple. Add your business details and where you operate your business from and you'll receive a postcard in a few working days with a code to confirm your account.

If you don't have an office address that you can register from, you may use our address for only £12.50 a month (for a limited time) by signing up for our virtual office package.

Keyword research to understand your industry

You could use keyword research to understand search volumes and general interest in services in your industry/ consulting skills set.

The two best tools for this are:

Reach out to more junior colleagues you've worked with

If you've worked in projects with more junior colleagues who were also working as contractors then reach out to them.

For one, it's good to support more junior people during this time. Additionally, they may be working on other projects or know people in their network they could refer you to.

Join Industry Associations

There are a broad range of industry associations that are likely to cater to your industry. There may be free online events, discounted memberships available or ways for you to try and test a membership before joining.

British Services offers a comprehensive list to browse by location and activity.

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