If you are a contractor or freelancer working in the UK you may have been pitched the tax benefits of paying yourself through an Employee Benefit Trust (EBT).

With an EBT contractors receive just a basic wage equivalent to the Statutory National Minimum Wage. The remainder of their gross earnings go into an EBT, usually offshore. The company making the payment also claims Corporation Tax relief on these payments. The trust then “loans” back the money to the contractor and this loan is not therefore taxable. The loan is never repaid. In effect you receive your wages tax free.

EBT’s have been used from such professions as IT Contractors to Premier League Footballers.

Editor | 2 November 2015
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The Freelancer and Contractor Services Association (FCSA) has accused the government of valuing councillors over contractors, calling hypocrisy on government plans to provide travel-to-work tax relief to local councillors at the same time as talking of scrapping them for temporary workers.

At a time when the review into contractor travel and subsistence (T&S) tax-relief is ongoing, it has emerged that MPs want to award councillors a similar package of tax savings on their travel.

The government changes will exempt councillor travel expenses from income tax and National Insurance. This applies to journeys made between the councillor’s home and permanent workplace.  

Internet and telecoms company TalkTalk was the victim of a “significant and sustained” cyber-attack last week, which could have compromised the personal details and bank account information of thousands of their customers.

Police in Northern Ireland have arrested a 15-year-old boy in connection with the attack, which is just the latest in a string of cyber insecurities.

As more companies wake up to the dangers of cyber-crime the demand for skilled IT contractors is on the rise.  

Editor | 20 October 2015
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In response to a petition asking the government to reconsider their proposed dividend tax hike, HM Treasury published a statement which, according to critics, was out of touch with the contracting industry and the needs of small businesses. 

The reply was published on the Parliament website where, once a petition reaches 10,000 signatures it must receive an official response from the government.

One contractor writing for IT Contracting dissected the government’s statement and explained paragraph by paragraph why it was “factually wrong” and removed from the realities of running a small business. 

Editor | 14 October 2015
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New research has found that proposed changes to contractors' travel and subsistence allowances could cost them up to 20 per cent of their annual revenue. 

In July of last year the government launched a review into expenses and benefits for contractors. On 23 September 2014 they published a discussion paper outlining their case for changing the current rules on tax relief.

The government believes that travel and subsistence expenses, like travel between workplaces and the cost of a meal at a temporary workplace, are over generous and outdated. 

If you are a contractor or freelancer the most tax efficient way for you to work is often through your own limited company. This allows you to benefit from the incentives offered for setting-up and running your own business and hence allows you to maximise your earnings after tax.

It also enables you to develop and build your business & brand and potentially in the future employ others.

The downside of this is that there is more responsibility on you as a director of your own limited company and there are statutory requirements re maintaining financial records, preparing and submitting year-end accounts, corporation tax returns, personal tax returns, payroll and managing invoicing & payments. 

Potentially good news for lower paid contractors working through an umbrella company is that on 26th October 2015 the House of Lords voted not to accept the Chancellors proposed changes to tax credits that will affect the entitlement to the credits for low income families.

The proposed changes are expected to result in some families being up to £1,300 worse off per year by 2020. The Government are trying to reduce the earnings limit for entitlement to the Working tax Credit and the Child Tax credit.

Umbrella, the Cloud Accountants, are pleased to announce that we now have 18 accredited accountants for both FreeAgent and Xero Cloud Accounting Software products.

By giving a choice Umbrella are able to find a solution that satisfies most contractors & freelancers operating through their own limited company in the UK.

 In fact Umbrella Accountants LLP are one of the few accountants to offer more than one Cloud Accounting Service.

We are also able to help if you are already with a different provider i.e. Sage One, Quickbooks, ClearBooks etc.

Umbrella contractor accountants currently have in excess of 1,000 limited companies using one of their accounting services.

Editor | 19 October 2015
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The Association of Independent Professionals and the Self-Employed (IPSE) has welcomed news of deflation in the UK economy.

Last week, the consumer price index figures for September showed that prices had dropped by 0.1%. This news was welcomed by IPSE which said that lower prices and rising incomes were making freelancers and other self-employed people better off.  

While deflation is treated cautiously by some economists and politicians, lower consumer prices and, in particular, lower transport costs will directly benefit contractors. 

Editor | 9 October 2015
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Self-employed contractors and umbrella PAYE employees had lots of reasons to cheer at this year’s party conferences.  We’ve highlighted some of the most important points that could affect our clients. 

As the party in government, what came out of the Conservative camp in Manchester will have the most immediate impact for our contractors.

David Cameron announced a relaxation of planning rules in an attempt to boost home ownership. Under the plans, builders would no longer be required to offer low-cost ‘affordable’ homes as part of new developments. More building work is always welcomed by construction contractors whether they are self-employed or PAYE.  

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