My first foray into the world of contracting. help
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Stoke
Posts: 3,182 Forumite
in Cutting tax
Hello,
After many years of procrastinating, making up bad excuses (permanent roles are safer etc) and convincing myself I wasn't really capable, I finally grew a pair and have accepted my first non-permanent role as a contractor for 12 months.
Good money (one of the perks) and I get to work from home.... yay.
I am looking for some advice though, I haven't started the work yet so hopefully I can get this resolved before I do.
A couple of my friends who have done contracting work, suggest that I should put some costs through as a workplace expense, which I presume means I don't have to pay VAT?
Electricity, Gas and Water have already been mentioned several times, along with any equipment I need to purchase to go about my daily tasks. How do I go about this though? Do I just keep receipts or do I need to do something special? How do I go about claiming it back, or is it just part of a 'tax write off' (another term I've heard mentioned a few times).
The role is also self-assessment from a tax perspective, rather than PAYE. For this, I presume I need to keep records of my monthly pay in the form of invoices? Then when I fill out my tax form, I simply need to declare these?
Any help and advice to get me onto a good start would be ideal. I am thinking of hiring an accountant to give me some advice regarding my accounts.
After many years of procrastinating, making up bad excuses (permanent roles are safer etc) and convincing myself I wasn't really capable, I finally grew a pair and have accepted my first non-permanent role as a contractor for 12 months.
Good money (one of the perks) and I get to work from home.... yay.
I am looking for some advice though, I haven't started the work yet so hopefully I can get this resolved before I do.
A couple of my friends who have done contracting work, suggest that I should put some costs through as a workplace expense, which I presume means I don't have to pay VAT?
Electricity, Gas and Water have already been mentioned several times, along with any equipment I need to purchase to go about my daily tasks. How do I go about this though? Do I just keep receipts or do I need to do something special? How do I go about claiming it back, or is it just part of a 'tax write off' (another term I've heard mentioned a few times).
The role is also self-assessment from a tax perspective, rather than PAYE. For this, I presume I need to keep records of my monthly pay in the form of invoices? Then when I fill out my tax form, I simply need to declare these?
Any help and advice to get me onto a good start would be ideal. I am thinking of hiring an accountant to give me some advice regarding my accounts.
0
Comments
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you will find a lot of info here https://www.gov.uk/topic/business-tax/self-employed0
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A couple of my friends who have done contracting work, suggest that I should put some costs through as a workplace expense, which I presume means I don't have to pay VAT?
you pay VAT if:
EITHER: you choose to voluntarily register because it is to your financial advantage to do so on either the flat rate scheme or the standard scheme (although given the changes to the Flat Rate Scheme that is now rather unlikely)
OR: you are required to do so because your taxable turnover is >£85,000
don't mess around with VAT if you do not know the rules. HMRC VAT inspectors are the one area of HMRC where tolerance is in short supplyElectricity, Gas and Water have already been mentioned several times, along with any equipment I need to purchase to go about my daily tasks. How do I go about this though? Do I just keep receipts or do I need to do something special?
read this:
https://support.sherwincurrid.com/index.php?/Knowledgebase/Article/View/172/2/Use-of-home-as-an-officeHow do I go about claiming it back, or is it just part of a 'tax write off' (another term I've heard mentioned a few times).
The role is also self-assessment from a tax perspective, rather than PAYE. For this, I presume I need to keep records of my monthly pay in the form of invoices? Then when I fill out my tax form, I simply need to declare these?
Any help and advice to get me onto a good start would be ideal. I am thinking of hiring an accountant to give me some advice regarding my accounts.
whether you should be a self employed sole trader or whether you should be an employee of your own full blown limited company is the very first question you should ask your accountant as, depending on your income, it will be much more tax efficient to be one or the other
you should also check out if your contract with your client is exposed to IR35 implications0 -
please do not listen to friends if they are not going to explain things to you in intimate detail because you will get it wrong
you pay VAT if:
EITHER: you choose to voluntarily register because it is to your financial advantage to do so on either the flat rate scheme or the standard scheme (although given the changes to the Flat Rate Scheme that is now rather unlikely)
OR: you are required to do so because your taxable turnover is >£85,000
don't mess around with VAT if you do not know the rules. HMRC VAT inspectors are the one area of HMRC where tolerance is in short supply
your either claim a flat rate £18 per month or your calculate your actual apportioned costs. If claiming actual you will need to keep detailed records of your calculation and bills
read this:
https://support.sherwincurrid.com/index.php?/Knowledgebase/Article/View/172/2/Use-of-home-as-an-office
it is obvious you MUST see an accountant as your level of knowledge is totally inadequate for you to DIY this at the moment. The role is not "self assessment", it is "self employed" and you pay tax on your profit.
whether you should be a self employed sole trader or whether you should be an employee of your own full blown limited company is the very first question you should ask your accountant as, depending on your income, it will be much more tax efficient to be one or the other
you should also check out if your contract with your client is exposed to IR35 implications0
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