Tuesday, March 29, 2011

Contractor Tax

Contractors working through their own limited company usually take home between 75% and 80% of their contract value on the average. And the type and level of taxes one contractor needs to pay wholly depends on how you structure your finances and on your IR35 status. The amount of tax you will pay as a contractor through your own limited company comes in two different forms. One is the tax you pay through your company and another is the personal taxes you pay for.

If the personal tax you pay for is covered by the IR35 status of your contract, you will pay higher taxes so it is best to remain out IR35. Contract not under IR35 take the low salary path coupled with high dividends coming from company profits. The net company profit is subject to 20% corporation tax. Corporate taxes varying from 0% to 30% applies to all limited companies. Small computer companies pay the 20%tax rate.

Contractor Calculator
It lets you compute for your net income from a contract. Free contractor calculator can be secured online to give you illustrations of the possible amount a contractor could take from their contracts. Full tax planning is assumed for working through limited companies in some of these calculators.

Contractor Tax Solutions
There are many companies offering services that help lower down contractor taxes. You can get tax tips on how to survive as a Contractor or Freelancer. Some offer getting flexible temporary workforce as ideal solutions for employers. Looking out to the interim and contractual jobs market to meet staffing demands can make the employers less nervous about taking on permanent staff members. It is one of the ways in which businesses meet its increasing customer demands.

Times are tough during recessions, so getting advantage of every government scheme or piece of tax saving advice is always a welcome relief. Construction industry sub-contractors retain their gross payment status by having a clean tax record. This important if they want to go around paying for a 20 per cent sub-contractor tax.

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