Financial Services for Contractors

Planning your personal finances as a contractor

Contracting offers many opportunities in terms of earnings potential and flexibility but also potential financial pitfalls. You’ll no longer have access to a company employee benefits package and optimising your earnings and savings can be more complex when you’re a contractor. When it comes to mortgages, you won’t necessarily ‘fit’ the lenders’ standard criteria which can make it hard to find a good deal.

It’s important to take specialist advice on how to manage and plan your personal finances as well as those of your business. Once your accountant has advised you on how to take the most tax-efficient blend of salary and dividends out of your company, how do you make the most of your ‘personal’ money? Most contractor accountants will advise you to speak to a financial advisor, but some, like Intouch can offer a specialist service to their contracting clients

Intouch clients get all the financial support they need to overcome the specific challenges facing contractors. That’s because as part of the wider Brookson Group, we offer our clients access to expert financial advice and products that have been designed with the contractor in mind.

 

Specialist contractor financial advice

Brookson Financial have been offering expert advice and support for contractors and self-employed professionals for over 20 years, developing a deep understanding of how independent professionals work and what their financial needs are.

They are a specialist team of Financial Advisers that pride themselves in understanding the unique opportunities and challenges self-employment brings. As an Intouch client, you are able to access this specially designed range of contractor financial advice and services:

  • Competitive, contractor-specific mortgages
  • Pension advice
  • ISAs
  • Retirement Advice & Review
  • Investment & Saving
  • Retirement Forecasting and Planning
  • Illness & Life Cover
  • Business Insurance

Free Financial Health Check

The foundation of sound advice is a clear picture of your personal and corporate position combined with an understanding of your short, medium and long-term objectives. That’s why every Intouch client is entitled to a free Financial Health Check. Following a short phone call, you’ll receive a personalised report covering your current and future financial well-being and highlighting any areas of need.

Join Intouch Accounting, get so much more

Whether you’re looking to switch accountants or just starting out in contracting, with Intouch you get everything you need to run your Limited Company from an accounting and tax point of view for a fixed monthly fee. Your dedicated Contractor Accountant will handle everything for you, helping to maximise your income, while staying on the right side of the tax man. With unlimited IR35 advice and reviews and of cours access to contractor-specific financial services products, you’ll have everything you need for your contracting life.

So get in touch today

 

You might also like:

Contractor advice – mortgages made easy

How to get started as a contractor – infographic

How to switch to intouch – infographic

 

 

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.

What’s left for contractors?

What’s left for contractors?

The Summer Budget dealt a heavy blow for contractors who are rightly feeling pretty bruised after Wednesday’s announcements. Chancellor George Osborne seemed intent on delivering very little to inspire confidence in the contractor market. Our post-Budget blog picked out the opportunities and challenges contractors are now faced with.

Some commentators have speculated that the Government is making a stand against ‘tax-motivated incorporations’ in an attempt to move all contractors back to PAYE and boost the coffers but we also know the job market is shifting towards a flexible workforce and the skills so many contractors offer are still sought throughout the UK. Their demand will be heightened as companies look to invest and grow without necessarily increasing headcount.

Here we look at the advantages of contracting through a Limited Company:

  • Control over what money you take out of the company and, therefore, the tax paid now so you mitigate the higher tax rates. There’s no doubt you’ll continue to pay much less tax than an Umbrella worker who must take all their income, even if they don’t need it. Working with your contractor accountant will help you ensure you have the most tax efficient income planning to suit your needs.
  • Leaving surplus money in the company will mean avoiding higher taxes. And when you are ready to release that surplus to yourself consider closing the company and releasing cash as a capital gain that suffers less tax than dividends.
  • Flat Rate VAT Scheme – this was introduced to make filing a VAT return easier for businesses where initial turnover is less than £150,000. Companies simply pay HMRC a flat percentage which means that part of the VAT charged to clients is retained by contractors.
  • More claimable expenses – it’s true that it seems very likely that the already planned clamp down on travel and subsistence expense claims for Umbrella workers is going to extend to personal service companies.  For Umbrella workers, the end of expenses, including accommodation, travel and subsistence, was previously announced in March 2015 Budget and so really is in sight. PSC contractors, however, will only be subject to the proposed rules if they are subject to supervision, direction and control (SDC). They can negotiate SDC individually with clients and the best outcome therefore remains available. But even if you lose tax relief you won’t be any worse off than Umbrella or permanent employees.
  • In a genuine twist to the Summer Budget HMRC released a consultation on draft legislation previously proposed in the March 2015 Budget.  Benchmark Scale Rates (BSR) are flat rate expenses that can be reimbursed as an alternative to actual expenses and are intended to ease administration. Previously contractors would have to request their use and often requests were accompanied by conditions that were difficult to manage for single person companies. The draft legislation places BSR on a statutory basis meaning that entitlement appears more accessible. Although guidance will follow before 6 April 2016 and we can expect some conditions to remain the use of BSR may soften the blow of other changes.
  • Multiple shareholders – as a company you should look carefully at the shareholders who receive dividends and in the right circumstances keep higher rate taxes to a minimum by careful planning of dividends and who holds shares in your company.
  • The positive connotations of being a Limited Company has many advantages when it comes to securing work, especially as many organisations, including government, will only employ contractors operating through a Limited Company.
  • If you’re intending to contract for the long-term you’re still most likely to be better off in real terms by forming your own Limited Company. The total long-term benefits (of which tax is only one) far outweigh the costs and administration in setting up and running your company.
  • Being your own boss and have complete control over your finances and your business, along with all the lifestyle enhancements that go with this. You choose how you organise your tax planning to reap the maximum net income for your work and how much you need to work to achieve your financial goals. Working with a contractor accountant makes this even easier!
  • Being outside of Agency Workers Regulations (AWR) can greatly help you when you are seeking work via some agencies. AWR regulations don’t apply to Limited Company contractors, like they do an Umbrella worker, so there will be less administration for  the agency.

 

There’s no doubt that having your own personal service company is still more lucrative than operating under an Umbrella. The extra 7.5% tax on dividends remains substantially less than the combined effect of Employee’s (12%) and Employer’s (13.8%) National Insurance suffered by Umbrella workers.

 

In times of uncertainty it’s perfectly natural to feel anxious or helpless. For now the contractor community must ride the storm and avoid knee-jerk short-sighted reactions. Contractors are a vital part of the UK workforce and economy and you have a voice. Here are some things you can be doing now:

  • Speak to your contractor accountant about how the recent changes will affect you. That way you can mitigate the potential pitfalls and take advantage of the opportunities.
  • Upgrade your accountancy service – don’t try and do everything yourself. Working with a specialist contractor accountant, you can safeguard your future and not let the Government dictate your working practices.
  • Don’t settle for second best – if you already have a contractor accountant but don’t feel you’re getting the best from them, explore what you can get from other providers. With Intouch you get the combination of online accountancy software and unlimited personal advice for an all inclusive fee of £92+VAT a month.

 

Intouch will be remaining very firmly part of the discussions and government consultations, actively representing the best interest of contractors. We are here to serve our clients and fight the contractors’ corner.

 

Contact us today to discuss joining Intouch Accounting.

 

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.