The Freelance Thread (Contractor, IR35)

Yep, so there's no change

• buyers still determine status
  
• all existing IR35 legislation to remain in place
  

Mettle have a no-fee business account which gives you free Freeagent. Very easy to sign up, you only need one transaction per month in the Mettle account to qualify.

I just did it, very little effort to save ~£180 a year.

I've started picking up some freelance research work alongside my full-time job working for NHS Scotland in project management, and I'm a bit confused about whether I need to register as a Sole Trader or not.

The criteria on this page aren't relevant to me https://www.gov.uk/set-up-sole-trader, so can I skip registering as an ST and just submit a tax return next January? I'll be earning more than £1,000 in my freelance work, on top of a ~£30k salary.

Reading it again, I think I do need to register as an ST, but it's just the usual HMRC gibberish writing - though any advice appreciated!

Yep, you do need to register as ST. Think of it as a first step to freedom!

Hmmmm debatable but thanks for responding!

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If you don’t feel comfortable building it in Wordpress, get a developer, pay a few hundred bucks (200-300 max) and you are sorted for life with capabilities to edit it yourself. I can help with that if you still
Need it

FTC invoicing through a Ltd Co. Are you eligible for sick/holiday pay and pension or do you need to be PAYE for those?

You’re an employee of the Ltd Co, presuming you’re a director of that company you can pay yourself whatever salary you like - if the Ltd company has funds.

If you are sick/on holiday the Ltd company won’t be invoicing for those days (if the contract is for days worked). Pensions are more complicated and need an accountant to explain.

Contractoruk is my goto for this sort of thing

https://www.contractoruk.com/contracts/what_fixed_term_contract.html

From the look of it, if the contract is between the Co. and the Ltd, it's not an FTC. There is no employment contract and not responsibility for the Co. to pay sick leave or pension and the like.

As a director of the Ltd, it's up to you how you pay you the employee of the Ltd, including hikiday oay / sick pay. My Ltd, for example, paid me a monthly salary, irrespective of holidays or sickness.

Your Ltd can even pay gross into a pension for the employees, and save on NI payments, and corp tax.

@l_fignon @TW This was what I thought - my ltd is effectively the agency. However according to HMRC my client is my employer and I have an Employer PAYE Reference number. Is this because this contract is inside IR35? This is my first time inside IR35 so new dealings for me.

However, a worker is not on a fixed term contract if they are:
contracted through an agency,

https://www.contractoruk.com/ir35/what_does_inside_ir35_mean.html

I'd ask the same question on the contractoruk forum - it's usually pretty helpful.

Are you with an agency, not your own ltd company?.

My own Ltd Co

League of Extraordinary Freelancers: does anyone have any pro tips for someone about to take the plunge (me)?

Like, is there a to-do list/PM platform that has the best free version? Are there any other bookkeeping options beyond user amey's Crunch referral? Anything you wish you'd known at the beginning?

Don't use a corporate accountancy (like SJD or similar) - try and find/use someone local to you (helps for face to face meetings) that's recommended also.
Don't try and do everything yourself - if you've got a decent accountant, they'll sort all your HMRC etc type paperwork for you.
Do claim for all valid expenses i.e. use of home as an office/broadband/mobile phone/petrol or travel to-from place of work
Do buy another bike - company asset :D
Do speak to other contractors - but don't take their word as gospel - what's good for the goose isn't necessarily good for the gander :D
Do consider adding your wife/partner as an employee/secretary i.e. if you currently transfer money to them for rent/bills/groceries etc this can be covered by the company meaning you don't have to take money out of the company and pay yourself (and be taxed on it)

Fuck all the tax dodging shite - the trajectory on this stuff has been the government coming after you and it is not going to get better. It's also somewhat grubby.

If you are any good the money will come.

Two tips

• Network like fuck. This is 50% of your job now
  
• Don't forget to develop your skills because the folks you work for are not going to do this for you.
  

It's funny you mention tax dodging - my current contract ends in October and I was considering closing the company via the MVL process, however I was made aware of 'money boxing' and am now hesitant to do this. How can HMRC claim this is avoidance as any money/profits remaining in the company (at each year end) would be subject to corporation tax etc, and therefore any tax due would already have been paid. Hardly avoidance is it? Or am I missing something?

Do consider adding your wife/partner as an employee/secretary i.e. if you currently transfer money to them for rent/bills/groceries etc this can be covered by the company meaning you don't have to take money out of the company and pay yourself (and be taxed on it)

I'm assuming this is the tax dodging

But is it dodging? As they would pay tax via their annual tax return. And given that an additional employee would result in the requirements for a workplace pension, there would be additional NIC's to pay also.

One other thing to consider, with the partner as an employee, they would be eligible for the company bike scheme too! Bike n+2! Happy days!

Generally the fraud is that the salary is equivalent to their unused personal allowance (or possibly up to the lower rate threshold) so no tax is paid.

I get what your saying - and I assume this situation is "utilised" by almost every limited company. I would add that my partner has a job which generates more than the personal allowance anyway, and that the salary from my limited company is taxed via their annual return, and as such no tax avoidance.

depends whether she's doing any work for the salary
if you're paying her a salary because it's more efficient to pay the extra to her than it is you (if, say, it keeps you both the lower bracket rather than you tripping into a higher one) then it's still avoidance
but as you say, you wouldn't be the first or last if you did it that way

I'd not heard of money boxing. When I contracted then I paid myself dividends to cover what I needed for mortgage, bills etc and left the rest in the company. I'd guess as I only contracted for a few years then whatever was in the company wasn't large enough that HMRC would have thought of it as excessive. I did then close the company via MVL process when I took a permanent job (so no issues of starting up another company shortly after etc).

But when you say

How can HMRC claim this is avoidance as any money/profits remaining in the company (at each year end) would be subject to corporation tax etc, and therefore any tax due would already have been paid. Hardly avoidance is it?

If you had enough money in your personal accounts that you could afford to just pay yourself the tax free allowance and left everything else in the company for a long time - no dividends etc.
And then you MVL'd the company and paid 10% on essentially everything that was left then that would be avoidance as you'd be manufacturing a situation where you'd pay less tax than would be expected.
your company isn't avoiding paying tax, but you might be

There's a difference between evasion and avoidance. If you took cash in hand for the work and didn't declare it then it's evasion. Avoidance, I believe, is more open to interpretation. The spirit of the rules as it were

The spirit

Also the reason why we cant define gravel

*adding your wife/partner as an employee/secretary *

You can paint this any way you like, but if they aren't actually working for the company then you are doing it for the financial benefit

My partner does my admin - ie timesheets, invoicing, expenses, submitting vat return/corporation tax, comms with the accountant etc etc