Contractors and Freelancers

Tax as a Limited Company

 

Most sole traders who register as a Limited company do so, to take advantage of the benefits of tax planning and the ability to limit their own liability and enjoy greater security for their own assets. The tax position as a director of a Limited company, is more complicated than that of a sole trader. However, considerable savings can be achieved through paying yourself a minimal salary, and withdrawing dividends from your company.

 

You are required to submit tax returns, for your business once a year, and pay any corporation tax due, as well as personal tax returns for anyone named as a director of the company. You will also need to, pay VAT where applicable, ensure that any employees’ taxes and NICs are paid and submit accounts to Companies House.

 

  • As a small Limited company you will be liable for the ‘small companies rate’ of corporation tax, which is 19% on profits.
  • Your corporation tax bill due date is 9 months and 1 day of the company’s year end date.
  • Corporation tax is only due on your profits, so it can be beneficial to identify any expenses which can be deducted from your profits in order to minimise your tax bill such as the business set-up costs, travel, professional fees, insurance and more.
  • You can also minimise the level of tax you pay by leaving some of your profits in the company to ensure that you are only paying at the lowest rate – particularly helpful if your income fluctuates from one year to the next.
  • You will still have responsibility for your personal tax bill, which we can complete via the self-assessment process.

 

VAT

 

  • As a Limited company, you will need to register for VAT if you earn more than £85,000.
  • You will need to collect VAT from your customers at the prevailing rate. You will then need to pay this to HMRC (ouput VAT), although you can deduct any VAT you have paid on your business expenses (input VAT) from the total.
  • You can take advantage of the Flat Rate VAT Scheme or the ‘cash’ scheme which allows you to pay HMRC only after you have collected the money from your customers.
  • Your accountant will help you to ascertain which scheme will make most financial sense for you and your business.

 

National Insurance

 

  • A company payroll will need to be setup to take care of your salary and NIC liabilities.
  • If you have any employees then you will need to set up PAYE and NICs to be deducted at source.
  • These sums will need to be paid to HMRC which can be done on either a quarterly or monthly basis.

 

What can we do for you?

 

At Numerix Accountancy we can help you, to make the most of the tax efficiencies available to you as a Limited company.

 

  • We will complete your tax returns and compile your accounts at the end of each year.
  • Completion and submission of your annual return Companies House
  • Payroll
  • Dividends vouchers
  • The director/s Self Assessment tax return

 

If you are thinking about becoming self-employed, either as a freelancer or contractor you are in the right place. Whether it is helping you to decide the best way of working, providing expert advice, helping you manage your business finances, or guiding you through the compliance maze, we are here to help you at every stage of your self-employment journey.

 
Importance of Face to Face meetings with your contractor accountant?

 

UK Taxation is complicated. Of course there is scope to manage your tax affairs both personal and corporate over the telephone or online but, and it is a big but, what happens if you need to discuss something sensitive or complicated face to face?

 

That’s why at Numerix Accountancy we meet clients face to face at least once a year. In fact, we strongly encourage at least 2 face to face meetings during the year (one interim, and one at year end). This enhances better understanding of your business and facilitates accuracy, and efficient tax planning.

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