Of all of the recent developments that the clients of Freelancer Accounting’s (http://www.freelanceraccounting.com) accountants for freelancers should take note of, the greatest is surely the simplified expenses regime that is now in place. There are certain business costs that freelancers can deduct from their income to calculate their taxable profit, which in practice amounts to their allowable expenses lowering their income tax. The newly simplified regime enables the use of flat rates, removing the need to figure out your actual business expenses, which can involve more complicated calculations.
The new regime replaces the non-statutory deductions that could previously be claimed for business mileage, board and lodgings or use of home. Simplified expenses can only be used by sole traders and business partnerships, with limited companies and limited liability partnerships excluded. The new regime enables those freelancers using our accountancy services to calculate their allowable vehicle expenditure using a mileage-based flat rate – for cars and goods vehicles, 45p per mile for the first 10,000 miles and 25p per mile thereafter. Motorcycles are subject to a rate of 24p per mile. Businesses that have opted to use the scheme for a vehicle must continue to do so for the duration of that vehicle’s time with the business. You are not able to use the scheme, should capital allowances have already been claimed in respect of that vehicle.
Clients of our accountants in Reading also have the option to claim relief for the use of their home as a business, again via a flat rate scheme, as a replacement for more detailed expenses claims relating to gas, electricity, telephone and broadband costs. You will be able to deduct £10 a month if you spend 25 hours or more a month working at home, rising to £18 a month if you work 51 or more hours a month. Those working 101 hours or more a month, meanwhile, will be able to access a £26 monthly deduction.
There is also a flat rate scheme available to the trader using premises primarily for trade purposes, but where private use necessitates an adjustment. In this case, the allowable deduction will be calculated by the deduction of the authorised amount from the actual expenses incurred. Only such expenses as household goods or services, food, non-alcoholic drinks and utilities are designed to be covered by the scheme, with others – such as mortgage interest and council tax – still needing to be apportioned. The number of people in occupation will determine the exact rate, which could be £350 per month for one person or as much as £650 per month for three people or more.
Are you identifying every possible opportunity to legally and efficiently minimise your tax liabilities? Get in touch with Freelancer Accounting (http://www.freelanceraccounting.com) for more information on the latest legislation surrounding expenses, as well as for informed assistance with the rest of your taxation and accounting affairs from one of our seasoned accountants in Guildford.
As a contractor and a client of one of our accountants for contractors here at Freelancer Accounting (http://www.freelanceraccounting.com), chances are that you appreciate having the freedom to determine your own workload, something that is not enjoyed by those on the usual ‘9 to 5’. It therefore shouldn’t surprise you in the slightest to hear that so many people are choosing to work for themselves for this same reason, according to one recent poll.
The survey found that it was a perceived opportunity to get more work that led to 35 per cent of freelancers deciding to go it alone. For another 24 per cent, higher pay was an attraction. As for sources of freelance work, recruitment agencies ranked highest for popularity, with a third of freelancers stating that they had found their freelance projects in this way. Less than a quarter claimed to have found their work via job adverts – all interesting information for those presently considering going freelance and becoming a client of one of our small business accountants.
Indeed, there were some barriers to going freelance that were cited in the report, and which the right PCG accountant from a reputable firm like Freelancer Accounting could help to alleviate. 36 per cent of freelancers, for example, worried about their ability to gain a regular income, while 24 per cent of respondents fretting about finding regular clients. For 18 per cent, the management of HMRC paperwork was a source of concern. Freelancer Accounting’s seasoned and well-qualified accountants in Guildford are happy to advise freelancers on the management of their tax and accounting affairs, saving them time, money and stress so that they can focus on their core business.
Neither the popularity, nor the advantages of freelancing are an illusion, with about 40 per cent of all new jobs since 2010 having been the creation of freelancers and contractors, according to TUC. It is an indicator of how self-employed people have flourished in the UK’s post-recession landscape, and as the news of this has spread and other types of work have become scarcer, more and more people have decided to take the plunge into working for themselves, often with the assistance of specialist accountants for freelancers. There’s no doubt that the growth of freelancing has brought opportunities to those individuals and companies that appreciate the flexibility that it brings.
However, it is as important for a freelancer as it is for any other type of worker, to keep on top of their accounting and taxation affairs, ensuring that they operate in a way that is fully compliant as well as tax efficient. Freelancer Accounting (http://www.freelanceraccounting.com) is happy to cater for such people, providing them with access to dedicated contractor accountants who understand their business and serve as a vital point of contact, giving the most proactive and informed tax and accounting advice.
Freelancers like those taking advantage of Freelancer Accounting’s (http://www.freelanceraccounting.com) accountancy services work from contract to contract, so as the months and years pass, they will become especially well-versed at spotting the important factors in securing the right one. They say that an oral contract is ‘not worth the paper it is (or isn’t!) written on’, and although that is by no means true in every way, a contract in writing definitely leaves no doubt as to the parties’ joint commercial intentions and visions.
Ensuring that each of their contracts is in writing is therefore rightly the first priority of most savvy clients of contractor accountants. There are two basic parts of a contract – the commercial provisions and the legal background – the former tending to be in the form of a schedule and the latter making up the body of the agreement. The commercial provisions will include information on the parties, dates and the basis on which payment is made, as well as – most importantly – the work that is to be undertaken.
In fixed-priced contracts, there should be clearly set boundaries for the services that are to be provided, so that contractor accountancy clients aren’t at the receiving end of what is known as the ‘evolving spec’, or the ‘just jobs’ – in other words, the tendency for a client to give ‘just one more job’ to do within the contract. After all, you will have probably priced the job on the basis of what you judge to be the time and resources required to do the work and what the customer is willing to pay.
The part that covers the legal background, meanwhile, will include terms that will probably be the same for all of the work that you carry out for that client. Sections may be included in broad relation to ‘how’ each party will fulfil its end of the contract, which for you, could cover such issues as the quality of your work or responsibility for work that is defective. For the client, meanwhile, the likes of detailed payment provisions are likely to be included here. Also included in this section of the contract will be provisions affecting both parties, relating to such areas as termination, confidentiality and IPR.
Across all of these provisions, the client of a PCG accountant should ensure that the contract is understandable. Although you may benefit from a lawyer’s help in the production of the contract, you shouldn’t require one to understand what it says and means. The best contracts will always be clear and unambiguous in what they mean, with any third party reading it being able to understand its terms. After all, the document will be an invaluable point of reference for both parties, particularly in avoiding potential disputes.
The controversial and often confusing IR35 legislation should also not be far from your mind when you are putting together a contract – and the IR35 accountants of Freelancer Accounting (http://www.freelanceraccounting.com) can help to ensure that your contracts support your compliance with the law.