Omega2 Accounting

Contracting

More and more individuals are providing services to companies as an independent contractor rather then being a full-time employee of that company. However, there are many ways to do this and it is important that an individual picks the best approach for them.

The most traditional approach has been for an individual to set up their own Ltd company, with themselves as the director and sole shareholder, and to provide their services through this company. Known as a Personal Service Company (PSC) this approach remains a valid option even in today's climate though one important factor here is the IR35 legislation.

Until recently an alternative approach for contracting in the UK was the use of Managed Service Companies (MSC). However recent government legislation aimed at tackling the abuses that were prevalent in many MSC schemes have made this approach less attractive.

What is IR35?

IR35 is the commonly used name for a series of anti-tax avoidance measures first announced in 1999.  Its aim was to clarify who should be deemed “akin to employed” for tax purposes against those who were “genuine” self employed contractors. The IR35 status of a worker determines the correct amounts of tax and National Insurance that they should be paying and so the options available to them.

Omega2accounting will provide you with a free assessment of your IR35 status and, given the details of your contract, a projection of your likely earnings from the various options open to you.