Contracting from Fulham
A lot of contractors live in SW6. It is a short trip on the District line to the City, Canary Wharf is reachable without much fuss, and the West London tech and media offices in Hammersmith and White City are close by. Many people here have spent years in permanent roles at banks, consultancies or software firms before deciding to go independent.
Contracting can pay well, but it also turns you into a business owner overnight. Our ACCA qualified accountants work with contractors from their first contract onwards. We set things up correctly, keep your company compliant, and give you straight answers when an agency or client asks a question you are not sure how to answer.
We also understand that many contractors are busy on site with a client four or five days a week. Most of our work with you happens by email and online meetings, and your records sit in cloud software you can check from your phone.
Going from permanent to contract
Most contractors work through their own limited company, sometimes called a personal service company. The client or agency pays your company, and you then pay yourself from it. The other route is an umbrella company, which employs you and runs your pay through PAYE. Umbrellas are simple but usually leave you with less control.
Before your first contract starts, you need a company registered at Companies House, a business bank account, insurance such as professional indemnity, and a decision on VAT. If your contract rate means your turnover will pass £90,000 in a rolling 12 months, you must register. Many contractors register earlier by choice. We help you get all of this in place so your first invoice goes out on time.
What is included
- Company setup and HMRC registrations
- Year end accounts and corporation tax returns
- VAT registration and quarterly returns
- Director payroll and RTI submissions
- Dividend planning and vouchers
- Self assessment for directors
- IR35 contract and working practice reviews
- Advice on closing a company
IR35 in plain words
IR35 is the set of rules that decides whether a contractor should be taxed like an employee. If a contract is inside IR35, you are treated much like a staff member for tax, even though you work through your company. If it is outside, your company can pay you in the normal way.
Who decides depends on the client. Medium and large clients must assess your status themselves and give you a written determination. With small clients, your own company makes the decision. Status depends on how you really work, including control over how the work is done, whether you could send a substitute, and whether either side must offer or accept more work. We help you understand a determination, check your contract and working practices, and plan your pay around the result.
Paying yourself from your company
On an outside IR35 contract, most contractors take a small salary and the rest as dividends, once corporation tax has been paid. Corporation tax is 19% on profits up to £50,000 and 25% over £250,000, with marginal relief in between. Dividends have a £500 tax free allowance and are then taxed at dividend rates through your self assessment return.
The best mix changes with your other income, pension plans and whether you have a partner who owns shares. Pension contributions paid by your company are often an efficient way to take money out. We review this each year, and again whenever your rate or circumstances change, so you are not working to an old plan.
- Director salary and payroll
- Dividend planning and paperwork
- Employer pension contributions
- Expenses you can and cannot claim
Between contracts and long gaps
Gaps between contracts happen. The money left in your company can see you through, but you need to know how much is set aside for tax first. We keep a running view of what you owe in corporation tax, VAT and personal tax so you do not spend money that belongs to HMRC.
If you decide to go back to a permanent job or retire, closing a company has its own tax rules. Depending on the amount and your plans, you may be able to take the remaining money as capital rather than income. We explain the options well before you shut the door.
What we look after during the year
Once you are up and running, the routine work is steady. Your company accounts are due at Companies House nine months after your year end. Corporation tax is payable nine months and one day after it, and the CT600 return twelve months after it. You will also have VAT returns, payroll for your salary, a confirmation statement, and your own self assessment return by 31/1. We manage the calendar, send reminders and file everything for you.
Who this suits
- IT and software contractors working in the City and West London
- Finance and banking contractors moving from permanent roles
- Engineering and project management contractors
- Consultants on outside IR35 contracts
- Contractors who have received an inside IR35 determination
Common questions
Should I use a limited company or an umbrella company?
A limited company usually suits contractors on outside IR35 roles who want control over pay and pensions. An umbrella can be simpler if most of your work is inside IR35 or short term. We help you compare them for your contract.
Who decides whether my contract is inside IR35?
For medium and large clients, the client decides and must give you a status determination statement. For small clients, your own company decides. Either way, the decision should reflect how you really work.
Can I disagree with my client's IR35 decision?
Yes. Clients must have a process for you to challenge a determination, and they have to respond within a set time. We can help you prepare your reasons and the evidence that supports them.
Do I need to register for VAT as a contractor?
You must register if your taxable turnover goes over £90,000 in any rolling 12 month period. Many contractors pass this quickly because of day rates. You can also register voluntarily below that.
What expenses can a contractor claim through their company?
Costs incurred wholly for the business, such as accounting fees, insurance, equipment and some travel, can usually be claimed. Travel to a client site is more restricted if the contract is inside IR35. We tell you what applies to your situation.
How much should I keep in my company for tax?
It depends on your profits, VAT and how you pay yourself. We give you a figure to set aside each month and update it when your rate or hours change, so the year end bill is no shock.
I live in Fulham but my client is outside London. Does that change anything?
Your tax position depends on your contract and your company, not your postcode. Travel costs may be treated differently depending on how long you work at that site, so we look at the detail.