Are you self employed? New HMRC legislation will affect how you will be paid.
Posted on 12 November 2014
If you are a self employed there are some important changes happening in relation to how you are paid.
This is in line with new legislation introduced by the HMRC called The Onshore Intermediaries Act/ False Self-Employment. This legislation has been introduced by the HMRC as a measure to further combat tax and National Insurance avoidance.
What is the new legislation?
Under the Onshore Intermediaries legislation, there are 4 simple criteria to address in terms of being self-employed or not:
• Is the contractor subject to control, supervision or direction?
• Do they do the work themselves, rather than employing someone else to do it for them?
• Do they get paid for doing it?
• Is the contractors pay received as employment income?
If the answer to the any of the above is yes then you can not be self-employed.
Working within a hospital or medical surgery there is always some level of control of your day-to-day activities regardless of your grade. Therefore, you are now considered an ‘employee’ and we are now unable to pay you gross (without NI and tax deductions).
How does this affect you?
If you are currently receiving your income without tax and NI deductions, you will need to change the way in which you are paid. You can be paid in the following ways:
• PAYE directly through your recruitment agency
• Through an umbrella company who will make PAYE deductions
• Setup your own Personal Service Company (PSC)/ Limited Company solution
To work through Holt Doctors you must convert to an umbrella payment option, create your own limited company or be paid via a PAYE system by 31st December ’14.
For more information or if you would like to inform us of your new payment method call us on 0845 508 1491 or email email@example.com
Setting up as a limited company
There are many tax advantages in working through your own Limited company and using a reputable firm of accountants will offer you a complete service package both for your company and for your own self assessment.
The Accountancy firm will set up your company and obtain the necessary HMRC documents and Bank account; all the HMRC requirements for PAYE and corporation tax will be handled by the accountancy firm leaving you to get on with your day-to-day job. You will need to comply with the existing IR35 and MSC legislation so it is worth checking with your accountants first regarding this.
Numerous accountants offer a service to ensure your limited company is set up and administered correctly. We have secured the services of a few firms that will offer a bespoke and complete accounting package.
Alternatively, there are umbrella companies which you can sign up to and will act as your employer to manage all aspects of your pay, compliance and administration.
Because you are an employee of the umbrella company (and not the agency or end client), they can package your pay into a combination of salary and non-taxable items such as expenses and other employee benefits. This can commonly save between 25% and 50% of your tax bill.
After a simple set up, you complete timesheets and forward them to your umbrella company who will then invoice your recruitment agency or client before paying you via PAYE. It will also help you avoid the time and trouble of running a limited company.
Here are some suggested umbrella companies you may wish to use:
• Mac Professionals - www.macprosol.com
• Brookson - www.brookson.co.uk
• FPS - www.fpsgroup.comIf you have any further questions, please get in touch by emailing firstname.lastname@example.org
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