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As a contractor, working through your own Limited Company, paying Higher Rate Tax, will almost certainly see substantial negative effects on your take home pay.
What’s also significant is that if you’re a contractor earning £100k or more, you’ll see your Personal Tax Allowance reduced by £1 for every £2 earned over and above £100k taxable income. This Personal Tax Allowance reduction will continue until you have no Personal Tax Allowance left (depending on your tax code). However, for those contractors operating through a Limited Company, there can be a number of options to look at that can potentially reduce your income tax liability.
It’s important to note that the options available are dependent on your circumstances and are not available to everyone. Your circumstances could also influence how you interpret the information below. The information below could help you consider your potential options and should not be used as personal advice.
You’re best advised to take necessary advice from recognised experts such as a Tax Status Advisor, your Independent Financial Advisor or your Accountant, to find out whether these options are right for you.
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The Churchill Knight blog is regularly updated with helpful content for contractors and freelancers – especially articles that answer the most frequently asked questions about umbrella companies! Please pop back shortly to see the latest articles written by Andrew Trodden (Marketing Manager) and Clare Denison (Marketing Executive).