Decisions to be made
1. Early living requirements
The tax efficient way of running a company is to pay a small salary monthly and a large divided quarterly. The salary would generally be in the region of £625 per month This can cause difficulty in the early months and we therefore discuss with you the most tax efficient way of meeting your living requirements. For companies caught by IR35 we recommend withdrawing the full company income as director's salary subject to allowable deductions or expenses.
2. Travel Expenses
We have created a separate Travel Expenses page with information concerning the travel expense rules.
3. Company Car?
In the vast majority of cases personal vehicle ownership is preferable with business mileage claimed at the HMRC approved rate. In order to consider is a company car may be efficient the following considerations are relevant :-
- Value of car
- Make and model of car
- Date of first registration
- Petrol or diesel
- Home to work mileage
- Estimated private mileage
4. VAT Registration
An option and in most cases for contractors it is advantageous as a surplus can be obtained using the Flat Rate Scheme.
5. Pensions, Life Assurance etc.
The level of pension contributions is not dependent on salary levels and the merit of pension is considered on an individual basis. Where IR35 applies there is more incentive to pay pension contribution as the premium reduces both income tax and national insurance liabilities.
There are no onerous book-keeping requirements for contractors. We provide a spreadsheet although we can work from bank statements in many cases.
We have assited many contractors get started with their businesses. If you are interested in hearing more about how CTS can help your business, please contact Jon Dale on 01743 235 236 or email email@example.com.