A contractor is someone who provides services to a client (usually, a company). Their employment status is either self-employed, or an employee/worker working under an umbrella company. In most cases, contractors are self-employed and need to file a Self Assessment tax return. Even if you work for a client, the way you work is quite different to how you might work as an employee or worker. There’s a lot more freedom as a contractor as you don’t have to sign an employment contract and have the option to accept or decline clients at your own set rates. However, you are not entitled to holiday pay, sick pay or other employee perks.
For many contractors, you’re liable to pay your own taxes, unless you work for an umbrella company and pay via PAYE.
IR35 is a set of regulations that ensure that people who claim to be contractors are paying the correct amount of tax.
Off-payroll work – i.e. those who don’t pay tax via PAYE – is a common space for what’s known as ‘disguised employees’. These are people who are employees in everything but name, but who pay tax as if they are self-employed. Of course, there are lots of people who are genuinely self-employed, and if this is you, you shouldn’t be affected.
Of course we can! For support with you accounts and tax return, simply contact our experts today and request an appointment! We look forward to working with you to take the stress out of tax returns!
Self-Assessment tax returns must be filed with HM Revenue and Customs by 31st January following the end of the tax year. For help with your tax return, contact our experts today.