Childcare schemes and contracting

On the 5th October 2018, a new Tax-Free Childcare Scheme was launched, meaning that any new applications for tax relief on childcare need to be made direct to the government. This article explains how childcare schemes work for Limited Company contractors, both prior to and after this change.

 

Tax-Free Childcare post-October 2018

From 5th October 2018 onwards, parents will be able to apply for a new childcare scheme – Tax-Free Childcare. The Government will pay £2 for every £8 you pay to a childcare provider via your online account, up to a maximum of £2,000 per year. You will not be eligible if you or your partner earns £100,000 or more per year.

As a contractor this means that you are individually responsible for organising your childcare tax relief, with no involvement from your Limited Company.

 

Qualifying conditions

To qualify for the Tax-Free Childcare Scheme, the following conditions must be met:

  • You must have parental responsibility for the child you are claiming childcare for
  • Only registered childcare providers are approved under the scheme. These include nurseries, crèche facilities, registered childminders, play schemes and out-of-hours clubs run by a school or local authority
  • If the provider of childcare is a relative, they will have to be registered and run an approved business which offers childcare to other children
  • Payments made outside the childcare scheme won’t qualify for tax and NI exemptions. This includes cash paid to employees to cover childcare costs and invoices issued in the employee’s name but paid for by the company
  • The childcare scheme covers children up to age 15, or 16 if the child is registered disabled

 

If you signed up to a childcare scheme prior to October 2018

Those who signed up to a scheme prior to 5th October 2018 can still continue to use this as long as the employer still runs the scheme and they are still an employee. With an existing direct agreement, the Limited Company pays the provider for the childcare costs on behalf of the employee. The amount that is paid to the childcare provider is detailed in an agreement between the employer (Ltd Company) and employee.

If you joined before the 6 April 2011, the company could contribute £55 per week or £243 a month, which is exempt from income tax and national insurance, while gaining corporation tax relief through the company.

Any joiners after this date would depend on the taxpayer and whether they are a basic rate, higher rate or additional rate taxpayer:

 

WeeklyMonthlyAnnual
Basic rate taxpayers£55£243£2,916
Higher rate taxpayers£28£124£1,484
Additional rate taxpayers£25£110£1,325

 

Any direct agreement after the 5th October 2018 will be treated as an employment benefit and declarable on the P11d.

If you’re an Intouch client and you need help with any tax matter, just contact your Personal Accountant. If you’re not already with us and would like to find out more about how Intouch can help you contract through your Limited Company, just contact us on 01202 901 385.

 

 

This blog has been prepared by Intouch Accounting. While we have made every attempt to ensure that the information contained in this blog has been obtained from reliable sources, Intouch is not responsible for any errors or omissions, or for the results obtained from the use of this information. This blog should not be used as a substitute for consultation with professional accounting advisers. If you have any specific queries, please contact Intouch Accounting.

How to get started as a contractor – Infographic

If you’d like to know what happens once you’ve joined Intouch as a Limited Company contractor, then take a look at our infographic to see how easy the steps are…

Onboarding for newbies infographic

Working From Home – what can you claim for?

If you use part of your home as an office, you may be able to lower your overall cost of doing business. Here we outline some of the things you might need to know if you intend to claim expenses.

 

Claims

Firstly, you need to think about HMRC. Don’t worry, it’s unlikely to make any enquiries so long as the claim is reasonable and consistent with the type of business being operated. Be wary that not all local HMRC officers follow this approach, so it’s important that you’re prepared to back up your claim if they ask.

A dedicated room or workspace which is exclusively for business use is a must. If it has a dual purpose i.e. dining or kitchen table, then it’s not allowable as a tax deduction.

 

Two common ways of working out how much you can claim:

1. The flat rate method

This is the easiest to work out and doesn’t require any records to be kept or evidence of expenditure. HMRC publishes flat rates each year. The current ‘Home As Office’ allowance from April 2018/19 is £18 a month, making an annual claim worth £208. Not much, but better than nothing, and takes up no time or effort to calculate.

2. The apportionment method

Apportionment is when an expense is ‘split’ between business use and private use, on a basis intended to show the portion of time used for each activity. Apportionment is generally calculated according to the floor area of your home used for business purposes.

The apportionment method splits property costs into fixed and running costs; the amount that you can claim will be based on the portion of use that you have calculated as being applied to your business, and/or the actual cost of the business part of the expense.

For example, let’s say one room in a house with four rooms (bathrooms not included) is used as an office with the following monthly expenses:

Electricity – £60 

Gas – £20  

Council Tax – £100 

Insurance – £40 

Total = £220 

One quarter of the total could be claimed each month, i.e. £55.

(Note that phone calls need to be on a business line, or claimed on a personal line using an itemised bill.)

If you use apportionment, you’ll need to keep all your invoices and receipts as evidence of the costs incurred. By adopting a sensible and realistic approach reflecting your business circumstances, you should be able to successfully handle any HMRC enquiry.

 

Remember:

  • Decide whether the weekly flat rate of £4 or the more detailed apportionment method is best for you. If it’s the apportionment method, review this annually and maintain a record of costs.

 

  • If you only use a table top while your family watches TV, you are unable to claim use of home. However, If you set aside part of your home at specific times for business use, then you are able to claim.

 

These tips are for information purposes and are just a place to start. If you want to know more, we recommend you seek advice from a good specialist Contractor Accountant such as Intouch, who will review your specific situation and provide you with the right advice to make sure you’re claiming all the benefits you’re entitled to.

 

If you’d like more information on Working From Home – download your free guide here.

 

This blog has been prepared by Intouch Accounting. While we have made every attempt to ensure that the information contained in this blog has been obtained from reliable sources, Intouch is not responsible for any errors or omissions, or for the results obtained from the use of this information. This blog should not be used as a substitute for consultation with professional accounting advisers. If you have any specific queries, please contact Intouch Accounting.

Working From Home – where do you start?

Why work from home?

Contracting and freelancing are fast becoming the choice career moves for more employees each year in the UK and it’s evident why. Being your own boss allows more flexibility and the chance for a better work/life balance. Choosing the jobs you want, and when and where you do them is also a great perk. Some might say that they choose to work from home because a relaxed atmosphere increases productivity and efficiency, while others just like to avoid office politics. There are a whole host of benefits to home working, particularly from a health and well-being point of view.

 

Making it work for you

Most contractors prefer a combination of remote and on-site working, to ensure some kind of visible presence, or because they enjoy the variety it brings. But for those wanting to ditch the office environment entirely, these are some things to consider:

 

Advantages

•Arranging your routine to suit you

•Freedom to spend time with friends and family

•Setting up your work space however you like

•No commuting saves time and money

•Less stressful environment

 

Disadvantages

•Distractions such as housework and people who share the same building

•Finding it harder to switch off

•Feeling isolated. If this is a concern, take a look at our infographic for tips on how to make those all-important connections.

 

Setting up a workspace

The beauty of home working is that you can set up your space to suit your needs. You can use a spare room, convenient corner or even under the stairs – technology means workspaces can be much smaller these days, so don’t build that garden office just yet!

Make sure the space is as comfortable and efficient as possible. Get suitable furniture such as a desk at the correct height and a chair, which is good for your posture. Try not to buy expensive equipment to start with – basics would be a computer, printer and scanner – you’ll soon find out what’s essential. It’s also useful to have a smartphone specifically for business, which you can set to voicemail after hours.

And think carefully about colour and decor, which affect your mood more than you might think.

 

Be professional about it

Communication is one of the most important aspects for making homeworking a success, so reliable broadband is a must, as is making yourself contactable and available to speak during working hours. Respond to clients promptly so they know you’re on the job – they’ll want to make sure they’re getting their money’s worth after all. And don’t be tempted to slob around in your dressing gown all day either! Clients will expect exactly the same standards as someone who is office based, and ‘getting ready’ for work will put you in the right frame of mind too.

 

Costs and claims

Due to virtually no set-up costs, working from home is one of the cheapest ways to start a business. If you’re intending to claim expenses through your Limited Company, your home office should be adequately arranged to indicate that it’s a genuine business and not part of your normal domestic arrangements i.e. working from a dining table the family eat at every evening.

It’s also not sufficient to spend a few minutes a week on admin, you actually need to be working at your home office and generating income to justify a claim.

We’ll discuss more about this particular topic in our next blog, but in the meantime a good Specialist Contractor Accountant like Intouch will be able to advise on Home Office Deductions.

 

If you’d like more information on Working From Home – download your free guide here.

 

This blog has been prepared by Intouch Accounting. While we have made every attempt to ensure that the information contained in this blog has been obtained from reliable sources, Intouch is not responsible for any errors or omissions, or for the results obtained from the use of this information. This blog should not be used as a substitute for consultation with professional accounting advisers. If you have any specific queries, please contact Intouch Accounting.

The flexible working ‘movement’: where are we with it?

Today’s complex working landscape presents businesses with the challenge of meeting the demands of people with very different values, expectations and needs. Yet, they all seem to share a desire for flexible working.

It’s little wonder, then, that the flexible working movement has gained such momentum in the last decade. Employers have recognised that the traditional workplace is no longer fit for purpose. But we’re yet to reach a point where flexible working is ‘the norm’, even four years on from the introduction of laws by the UK government which gave everyone the legal right to request flexible working.

 

To use the ‘right to request’ or not

People are still unsure whether or not to use their right to request flexible working, for fear it could be perceived as a sign that they are less than dedicated to their job. In a study conducted by social media training experts Digital Mums last year, more than half (51%) of UK employees believed that asking for flexible working hours would be viewed negatively by their employer and a further 42% thought it would have a negative impact on their career.

Millennials, who are one of the key drivers of the movement, were particularly wary of not wanting to upset their employer, with two-fifths (40%) saying they’d be too nervous or worried to ask for flexible working hours, despite eight in ten (77%) wanting this way of working.

Those fears might very well be legitimate. According to a new joint report from flexible working experts Timewise and consultants Deloitte, more than 30% of workers who opt for flexible hours feel they have less status and importance as a result. A quarter of the 2,000 people surveyed also thought they had missed professional opportunities because of this.

For freelancers and contractors, there aren’t the same lingering fears, although they might have some concerns about whether working remotely could impact on the relationship with the client, if there is an expectation to be on site every day.

 

Remove the need to request

As we revealed in our previous blog on the pros and cons of flexible working, however, any concerns employers might have about what flexible working could do for business are often shown to be ill-founded.

Ask anybody who works flexibly whether they work harder and more productively now than they did when they were in a more structured setting and the answer would be unequivocally ‘yes’. Flexible workers often say they feel like they owe it to their company to go beyond the call of duty every day. While that brings up another issue entirely around work/life balance – another main driver of the movement – it goes to show how much staff value flexible working.

In a recent piece of research by SmallBusinessPrices.co.uk, more than a quarter (28%) of respondents said they value additional holiday days, sabbaticals and flexible working hours as employee benefits, over receiving a pay rise.

By promoting flexible working – rather than making employees request it – employers could find themselves with a line of new talent at the door, while holding onto the existing talent they already have in the building.

It could even help end gender discrimination in the workplace. According to the Timewise/Deloitte report, one of the biggest barriers to gender equality and pay parity is employers’ continued refusal to accept non-traditional working practices.

Timewise chief executive Karen Mattison stresses that the family structure in which one person stayed at home and another went out to work is “no longer the case for the majority of UK households” and employers need to react by changing their flexible working practices.

With the technology available today to facilitate flexible working, it’s never been a better time for individuals to dictate how long, where and when they work. More and more people are taking the plunge and ‘going it alone’ as either a contractor or a freelancer.

Of course, with Intouch Accounting by your side, you’re never alone. We are here to support you by answering any questions you may have, from assessing whether it’s the right time for you to contract or freelance, to helping you set up a Limited Company.

 

 

This blog has been prepared by Intouch Accounting. While we have made every attempt to ensure that the information contained in this blog has been obtained from reliable sources, Intouch is not responsible for any errors or omissions, or for the results obtained from the use of this information. This blog should not be used as a substitute for consultation with professional accounting advisers. If you have any specific queries, please contact Intouch Accounting.

Flexible working: Pros and cons

There’s no doubt that we’re now living in the era of flexible working. Of course, for contractors and freelancers, this trend of choosing how long, where and when you work is nothing new, but now it’s not just the self-employed who are empowered to manage their schedules.

In the UK, nearly-two thirds (64%) of employees now work flexibly, according to the ‘2017 Flexible Working Survey’ by Ten2Two. However, it seems that employers are still a little reticent to fully embrace the flexible working revolution, with Timewise’s 2017 report revealing that less than one in ten jobs paying over £20,000 are advertised as being open to flexible working.

So, why is it that firms are somewhat unsure about whether or not to promote flexible working to staff? Like anything, flexible working has its pros and cons. We’ll start with the cons:

 

1. Could hinder productivity

Organisations are concerned that giving everybody a degree of freedom in deciding how work is completed will result in reduced productivity for both individuals and teams. Even if employees are just 5% less productive working remotely, it’s going to start adding up once you think about it collectively. Meanwhile, for those who are self-employed, a day of distractions at home could mean that you have to play catch up at the weekend.

 

2. Feelings of isolation

Flexible working sounds good in practice for individuals, but the reality can be very different. For some people, too many consecutive days working solo can lead to feelings of isolation, particularly if communication with the ‘outside world’ is lacking. A good support network is essential so that individuals don’t feel like they have nowhere to turn should they need to. Meanwhile, from an employer’s perspective, a lack of collaboration between colleagues could limit the cohesiveness of teams and the sharing of ideas.

 

3. Work intensification

Flexible working often blurs the line between work and home, to the point where individuals struggle to switch off at the end of the day – an issue all contractors and freelancers who work remotely wrangle with. For the sake of work/life balance and productivity, individuals need to feel like they can pack work away for the day and not like they owe it to their company to go beyond the call of duty every day.

 

However, few would doubt that the pros of flexible working far outweigh the cons. In Ten2Two’s survey, 83% of employers agreed that flexible working had benefited their business. Here are the main arguments for adopting the trend:

 

1. Work anywhere remotely

Perhaps the benefit you most associate with flexible working is the ability to work remotely, away from the traditional office environment; be it at home, in a cafe, library, shared space, or even in a foreign country. Find the environment that brings out the best in you – if that’s at home, make sure you ‘craft’ in a way that means you can get stuff done.

 

2. Less stress + fewer sick days = increased productivity

Workplace politics can be a real problem if they are rooted in manipulation or gossip. Flexible working can help to minimise office politics, so the potential for conflict and any resulting occupational stress decreases. As stress decreases, so will the number of sick days employees take in the working year. This has obvious benefits to employers in terms of greater productivity, but it’s also valuable for freelancers and contractors who might have to forfeit a day or two’s work if they’re too sick to get out of bed.

 

3. Greater convenience for life priorities

Everybody has different priorities in life. For some people, their children will be the priority; for others, it might be sports and keeping fit. Flexible working gives us a better chance of being successful at what matters most to us. For example, having a flexible schedule means you can take an hour out to pick up the kids from school and do the food shopping.

Ultimately, flexible working works for some people, but others may need a bit more structure.

If you’re considering a flexible approach to work and think contracting is for you, Intouch Accounting are here for support by answering any questions you may have, from assessing whether it’s the right time, to helping set up a Limited Company.

 

This blog has been prepared by Intouch Accounting. While we have made every attempt to ensure that the information contained in this blog has been obtained from reliable sources, Intouch is not responsible for any errors or omissions, or for the results obtained from the use of this information. This blog should not be used as a substitute for consultation with professional accounting advisers. If you have any specific queries, please contact Intouch Accounting.

Contractor networking for introverts

Sharing, talking and mingling drains you of energy.

Most of the time you’d rather just focus on your work.

You’re a private person, so sharing feels awkward.

If the above describes you then you may be a bit of an introvert, which isn’t necessarily a bad thing. It’s common for introversion and shyness to get confused, when actually they’re completely separate. Broadly speaking those of us with introverted tendencies are inclined to feel drained from being around people for long periods of time, especially large crowds. Whereas shyness is the fear of negative judgement. Extroverts on the other hand, gain energy from socialising – their energy is sapped when they spend too much time alone.

This makes promoting yourself quite difficult for those with introverted characteristics – but you’ve decided that contracting is the life for you – so unless your skills are so niche and in demand that you’re highly sought after, it’s something you’re going to have to do. To put yourself out there, you’ll need to sell your skills to agencies and clients in phone conversations and interviews, network with those in similar fields and generally big yourself up! So how can you do all this without it being too overwhelming? Here’s a few ways to get over the hurdles of self-promotion:

 

1. Remember that many feel the same way as you do
Just because some people appear confident on the outside, it doesn’t mean they’re not a wreck on the inside. Maybe they’re just better at hiding it than you are, or they may have gone one step further and practiced managing their anxiety. Next time you’re in a situation you feel uncomfortable with, breath deeply and consciously take it in your stride. Nothing bad is going to happen – after all, thousands of nervous contractors and freelancers deal with it successfully every day.

2. Bond with others
Rather than viewing people as competitors, see them as a potential support network. If you look at it from this angle it may help to ease the difficulty of socialising. Building good relationships with people may create new work and contracts, as well as offer welcome support and advice, or even forge friendships by seeing you as an ally. It’s a natural human trait to want to connect and share, so don’t miss out by declining too many opportunities.

3. Use social media
There’s a certain amount of anonymity to be had from communicating online, plus you have the freedom to choose when and where to do it, so this form of communication is ideal for fitting around your requirements. Connecting, chatting and posting your opinions on a platform such as LinkedIn (the main one for businesses), means you can secure and build up valuable contacts without even leaving the house.

4. Attend networking events
Social media can be a brilliant tool for self-promotion, but it’s still quite impersonal. Nothing can replace a real-life, friendly smile and one of the best places to find those is at networking events. The thought of a crowded room might make some people shudder, but a way to overcome this is instead of focusing on the quantity of people you meet or conversations you have, find one or two people that you can devote your focus and attention to and enjoy those meaningful connections. Then give yourself plenty of alone-time afterwards to recharge.

5. Boost your self-motivation
You might think it’s all well and good doing all the above, but how do you get motivated in the first place?
•Keep a positive attitude – You can never fully control your circumstances, but you can certainly choose your attitude towards them.
•See the good in bad – When encountering obstacles, you want to be in the habit of finding what works in order to get over them.

 

Being more of an introvert just means you have the same talents and skills as everyone else, but just find promoting them a tricky area to master. Do what you’re capable of, keep the momentum going, and if you’re genuinely interested in other people and their needs and stay true to yourself and your work, then you’ve pretty much nailed it.

 

This blog has been prepared by Intouch Accounting. While we have made every attempt to ensure that the information contained in this blog has been obtained from reliable sources, Intouch is not responsible for any errors or omissions, or for the results obtained from the use of this information. This blog should not be used as a substitute for consultation with professional accounting advisers. If you have any specific queries, please contact Intouch Accounting.

 

How to get your Limited Company name just right

So you’ve decided to form your own Limited Company, congratulations! While it’s a fantastically exciting time for new employment adventures, there are a few things you’ll need to get in order before you can trade through your company, and one of them is your company name. How do you go about doing it, what’s required, and how do you check if it’s even available?

This blog looks at all the factors to consider when choosing the name to ensure that it complies with the rules set by Companies House.

 

Limited or Ltd – which one to choose?

The first thing to note is that all private Limited Companies in the UK must have either ‘Limited’ or ‘Ltd’ at the end of their name.

Beware: If you register with ‘Limited’ you can use ‘Ltd’, but if you register with ‘Ltd’ you can’t use ‘Limited’. Make sure you choose the right option.

 

What’s the right name for you and your company?

The perfect company name lets prospective clients know what you do and that you mean business. Here are a few things to consider:

  • What industry are you in, and can your company name reflect this? If you’re an IT contractor for example, portray what you do straight away to your prospective clients
  • How creative do you want to be? Would you prefer to appear serious, or stand out from the crowd with your uniqueness? Made-up words or acronyms can give an individual feel
  • Will your personal name feature in the company name? As in ‘Joe Bloggs IT Contracting Limited’ for instance
  • How will your company name sit alongside your personal marketing strategy (if you have one)?
  • Will your name reflect you as an individual, or your company?

 

Deciding what your personal and/or company image is will probably be the most difficult part of creating a name. Write a list and get an idea for what feels right to you.

Another tip would be to look at your direct competitors’ names – what do you like/dislike about them, and how will you stand out against them to your prospective client base?

 

What’s generally allowed?

As long as the name is unique there’s a wide range of choice available. Some people choose random words or phrases as they’re not intending to use the company name as a brand to trade on. If this is the case for you then you’ll probably be less concerned about what the name sounds like, which gives you even greater choice.

If you intend to incorporate the company name in your marketing strategy then just bear in mind that more often than not the most obvious choices have already been taken, so you may have to get a bit creative with it. Even if you can’t find something that you really like it’s still possible to use a ‘Trading Name’ that fits, as long as this doesn’t infringe on anyone else’s name or trademark. To do this you’ll still need to display your registered company name on all documentation and your website, but you can add something like ‘Stellar Computing Genius is a trading name of Xylo 2013 Ltd’.

If you’re professionally qualified, such as a Chartered Accountant, then you may be able to obtain permission to use this in your company name if you want to, but remember to check that the full company name remains entirely unique.

Here are a few rules and considerations every contractor must abide by:

  • The name can’t be the same (or too similar) to an existing name from the Companies House index of names. With expressed permission from the other name owner you can get around this, but this is based on exceptional circumstances only. To check if it’s already been taken, visit the Companies House website
  • Your company name can’t include a ‘sensitive’ word or expression. It also can’t imply business superiority, a particular status or specific function. For example, you can’t use the word ‘bank’, as this would need to be approved by the Financial Conduct Authority
  • National words such as ‘British’, ‘Great British’, ‘Great Britain’, ‘United Kingdom’ or ‘International’ are strictly controlled. Only Companies House will allow these based on exceptional circumstances
  • The name can’t have nor indicate any connections with the Government or local authorities
  • Be creative – but not rude! Offensive names are not permitted
  • Characters, symbols and punctuation can also be restricted

 

Beware: You may wish to call your company whatever you like, but Companies House has the power to reject any name they feel doesn’t comply with the points above. So save yourself time, effort (and potentially money) and make sure you comply to get it right first time.

 

Can you reserve a company name?

While you might know what name you’d like to use, you may not be quite ready to register your Limited Company. So what do you do? Unfortunately you can’t reserve your company name, but you can set up your Limited Company in a ‘dormant’ state.

Beware: Even though the company is dormant, your legal responsibilities as a Director are still active. Make sure you’re aware of what’s required of you while your company is dormant.

 

Can you change it further down the line?

If you want or need to change your company name you can do so in two ways:

  • Special resolution – if you change the name using a special resolution, you must file a copy of the resolution, a completed NM01 form and the appropriate fee with Companies House
  • Provision in the company’s articles – if you change the company name by means provided for in the company’s articles, you must file a NM04 form and the appropriate fee with Companies House.

 

Beware: Changing your company name through Companies House isn’t the only place you’ll have to do so. If you have social media platforms, stationery, or other mediums which carry your old name, these will all have to be changed, which can get costly. Our advice is make sure you like your name before you register it!

 

As part of Intouch’s monthly fixed fee, company incorporation is included. Our specialist team will make sure you’re eased into Limited Company ownership knowing that the name, information requirements and paperwork are fully compliant and have been appropriately filed with Companies House. Good luck!

 

This blog has been prepared by Intouch Accounting. While we have made every attempt to ensure that the information contained in this blog has been obtained from reliable sources, Intouch is not responsible for any errors or omissions, or for the results obtained from the use of this information. This blog should not be used as a substitute for consultation with professional accounting advisers. If you have any specific queries, please contact Intouch Accounting.