What is a super deduction?

It allows companies to claim a 130% first year allowance (FYA) for investment incurred on qualifying plant and machinery acquired between 1 April 2021 and 31 March 2023.

Under the super deduction, for every pound a company invests, their taxes are cut by up to 25p.

The government announced the super deduction in the March 2021 Budget, in the hope that the scheme will encourage business investment and stimulate economic growth.

Stricter IR35 rules mean that many limited company contractors are looking to switch to an umbrella working model.

Joining an umbrella company means that you pay tax at the same level as an ‘inside IR35’ limited company contractor, while also benefiting from holiday and sick pay entitlement.

When you choose an umbrella company, it’s imperative that you choose a compliant provider. Not doing your research at an early stage could cost you in the long run.

Umbrella compliance has hit headlines recently after HMRC warned contractors about a number of schemes offering higher than average rates of take home pay.

Highly skilled contractors working in software development, IT project management and many other roles in technology are among those most at risk from changes to IR35 rules.

Although these roles tend to be well paid, the contracts are often structured in a way that means they fall ‘inside IR35’.

In this brief guide, we aim to answer the most important questions about IR35 to help you better understand the rules, how they might be applied and how you can avoid paying more in tax.

New research from the Association of Independent Professionals and the Self-Employed (IPSE) suggests that contractors are lowering their day rates and working more to mitigate the impact of coronavirus disruption.

The study also points to rising concerns about the government’s tax policy, including upcoming changes to IR35 in the private sector.