Every year, you need to make sure you have all of your financial details in order so that either you or your accountants can complete your taxes. If you are wondering about which tax rules and regulations may apply to you, it is important to consider all aspects of your financial portfolio. Considering what work you do, who you do it for or with, how you get paid, and what types of supplies you need for your job are all important questions that will help you fill out your taxes more easily.
As mentioned above, how you get paid can greatly impact your taxes. If you are paid via an intermediary, then the UK tax legislation called IR35 comes into effect. This specific legislation will tax what it deems “disguised employment.” The designation of disguised employment means any work that you do where you get paid through an intermediary. This also means that the intermediary will need to have been paid directly by the client, just like a normal employee would. This type of compensation chain makes the IR35 tax designation come into effect.
This IR35 will the tax any employment you do where you receive payment through an intermediary. The rate that this income will be tax at depends on the rates that similar employment forms are taxed. The type of work you do for the intermediary will be assessed to see what the rate should be to tax your intermediary-paid income. This tax act was developed in 2010 in order to ensure that citizens receiving payment in this manner were paying the correct amount of taxes. It helps to avoid the previously common practice of workers splitting ownership of companies with their relatives to avoid paying the tax at the level they should have owed.
IR35 is also impacted by direction, supervision, and control. Some instances where IR35 will apply are if you work in construction, if you are an office-holder (a special designation that has a great deal more information attached to it), or if you happen to work with your partner. IR35 also applies if either your intermediary or your clients live abroad. Finally, if you are working for a charitable organisation through an intermediary, it is important to know that IR35 will not apply, that is as long as you work for this charitable client through a Managed Service Company or through an agency.
In the event that you do get paid through an intermediary, you will need to follow these IR35 rules and claim the income you receive on your taxes. One of the easiest ways to make sure that the IR35 legislation applies to you, and to make sure that you are paying the correct amount in taxes is to enlist the help of an expert accountant. A licensed accountant will be well aware of this legislation, and will be prepared to help you figure out just what it will mean for your individual tax situation. While it may seem complex, accountants will simplify the process, giving you the peace of mind knowing you have filed your taxes correctly.
It is helpful to know what HMRC is and to know where your taxes are going. HMRC is the authority that the United Kingdom has established to be put in charge of any tax, payment, or customs related work that goes on within the UK. The money that the HMRC collects goes to a variety of purposes, at the discretion of the government. The basic fund go to public services that keep the countries within the UK running. Additionally, money collected for these purposes can be given to individuals who are identified as needing financial support.
GM professional accountants are known as specialist contractor accountants in London.