Contract Partners

Two Common Ways for UK Contractors to Cut Their Tax Bills

Working as a contractor in the United Kingdom can be exciting in more ways than one. Many contractors appreciate, for example, the way their independence allows them to set their own schedules and pursue their own destinies. Some of the surprises that crop up along the way, though, are not always pleasant.One of the most imposing of these is the tax treatment that most contractors face by default. To those with backgrounds as full-time workers employed by established companies, the tax requirements of being a contractor can seem almost steep enough to make the whole arrangement pointless.For example, those who simply set up shop as independent contractors and get right to work face the duty of contributing to the country's National Insurance system. Normally taken care of by employers on behalf of their employees, these contributions fund the much-loved National Health System. While that might be a laudable goal, suddenly being forced to pay into the system can be a painful experience.Because of this, along with other issues, most contractors eventually seek ways of bettering their situation. The simplest of these is to make use of what is known as a PAYE umbrella company, a well-known legal instrument that can provide a certain amount of relief. This umbrella company uk contractors so often look to for help, though, does come with some real limitations.The most obvious of these is that it only covers contracting income of up to 25,000 GBP in a given year. Should any single contract exceed that amount, the PAYE arrangement will no longer apply, leaving some contractors right back where they started. In addition to that, the status of PAYE ir35 advice law is such that they still tend to entail some pretty steep obligations, with few contractors taking home more than 60% of so of the income that flows through them.Although these PAYE umbrella companies in uk law have their advantages, then, they have long been known to be far from perfect. Because of that, services like UK Contract Partners have worked over the years to create more satisfying solutions. Many contractors, today, then, take advantage of a newer style of tax arrangement that is based on the limited comp