New to the UK and working as a contractor - how do I arrange for tax?
June 10, 2009 8:54 AM   Subscribe

New to the UK and going to be working for a Europe-based company - how do I deal with this? Am I self-employed? What do I do about tax and deductions?

Have read previous questions, but they are a little different to this one. I recently moved from Australia to the UK. I will be working as a full-time contractor for a company based in Europe. From what I understand, this means they will pay me and I need to arrange for tax and other payments (eg NI).

Does this mean I am self-employed? Will the HMRC site tell me all I need to know? Do I need an accountant to set this up?

I have had limited company mentioned as an option - is this overly complex and expensive to arrange? I won't be employing anyone. I'll be just like a regular employee, except I work out payments instead of PAYE.

In Australia, I had a LOT of deductions. I attend several conferences a year and have professional membership fees. I heard that if you earn below 37000 GBP you can't claim deductions in the UK. But can I make deductions if I am self-employed?

Any other info greatly appreciated! I have always done my own PAYG tax in Australia but if this starts to look too hard I will go to an accountant.

I'm new to contracting in general - are there other pitfalls I should watch for? Will I find it hard to get credit cards etc now?
posted by wingless_angel to Work & Money (6 answers total)
 
Best answer: You're self employed. I used Companies Made Simple when setting up a limited company. They take care of everything and you'll have your company same day.

If you select their registered office option, they'll accept and forward any regulatory related mail that you might receive, as well as remind (nag, which is a good thing) about filings.

In terms of deductions your company can fund these activities. You should pay yourself the bare minimum (NHS requirement), then take the remainder as tax free dividends.

You probably should speak with an accountant, as you might realise an advantage by domiciling your company outside of the UK, even though its sole employee (yourself) is based in England.
posted by Mutant at 9:49 AM on June 10, 2009


And I have absolutely NO IDEA what that gibberish is after the companies made simple domain name is ... came along for the ride after I looked it up.
posted by Mutant at 9:51 AM on June 10, 2009


Best answer: Google for "IR35" before blindly setting up a company in the UK. Inland Revenue frowns upon single-person limited companies.
posted by lowlife at 11:00 AM on June 10, 2009


Best answer: Further to lowlife's comment you should note that IR35 is specifically directed against people/companies working for a single client and that they had IT contractors, in particular, in mind.

AFAIK there is no lower income limit for claiming tax relief against PAYE for allowable expenses and you will, of course, be able to claim deductions, within the rules, if you are self-employed. Are you getting confused with the £67,000 VAT threshold? Above this you have to register for VAT, an effect of which is that you can claim back VAT, though you can register, voluntarily, below this, though its not normally worthwhile.

You might want to know that the Inland Revenue runs workshops in tax for the self-employed, I did one as part of a loger course about being self employed but I sure there are other ways to access these.
posted by tallus at 11:43 AM on June 10, 2009


Mutant: And I have absolutely NO IDEA what that gibberish is after the companies made simple domain name is ... came along for the ride after I looked it up.

I imagine you got to Companies Made Simple by clicking on a Google Ad (probably the result of a Google search), then copied and pasted the resulting URL. The gibberish in the URL is a Google Click ID (note the gclid text at the start) which is used to allow webmasters to monitor their AdWords campaigns using Google Analytics. They can monitor their keyword conversion rates etc. by seeing which gclids come through most often. See here for more info.

posted by Busy Old Fool at 1:33 AM on June 11, 2009


Response by poster: Thanks for the comments! Tallus, I will look into the workshops, that sounds like something I could really use.
posted by wingless_angel at 1:49 AM on June 11, 2009


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