Personal tax

[Meghna Vora]

Hi All,

I am new to contracting so would like your advise here for tax benefits mainly. I do have one client for which I did adhoc work for few weeks and now I am not sure how to take payment from him. If I get it directly in my personal account, what will be percentage of personal tax that I need to pay? Or are there any better modes of payments that I can take on , which you can suggest to save tax?

-M

[cojak]

Hi All,

I am new to contracting so would like your advise here for tax benefits mainly. I do have one client for which I did adhoc work for few weeks and now I am not sure how to take payment from him. If I get it directly in my personal account, what will be percentage of personal tax that I need to pay? Or are there any better modes of payments that I can take on , which you can suggest to save tax?

-M

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[Jessica@WhiteFieldTax]

You can't really change history. If you did the work personally, and that was the engagement terms, written or oral, then you will have to receive it personally.

Assuming client has not operated PAYE, then you will need to register as self employed for this income.

Longer term, you then need to think about pros and cons of:

~ remaining self employed
~ personal service company
~ umbrella

[northernladuk]

Get an accountant. Sounds like you are making a rod for your own back here and are going to get in to a lot of trouble.

Get a professional to sort it out for you. I the long run a good accountant will save you a hell of a lot more money than he costs so a good investement.

Never ceases to amaze me how people seem to forget to think about how to get paid before doing work.

[Craig at Nixon Williams]

As the work has been done (and I assume invoiced) in your own name (rather than in the name of a seperate entity) then the client should deposit the to your bank account.

The rate of tax that you pay on these earnings is dependant upon your total taxable income for the year and therefore without knowing these details it is impossible to state a simple percentage that should be retained. It would be worth seeking the advice of an accountant as there may be expenses that can be offset against this income in order to reduce the amount of tax payable.

If this is not a one-off and you will be contracting in the future then you should perhaps evaluate the options for providing your services (ltd vs umbrella) as each have pros and cons.

[Andrew at Boox]

Get an accountant. Sounds like you are making a rod for your own back here and are going to get in to a lot of trouble.

Get a professional to sort it out for you. I the long run a good accountant will save you a hell of a lot more money than he costs so a good investement.

Absolutely. A good personal accountant will help you assess all your types of income throughout the coming tax year and help you to plan so that you minimise your personal tax burden!