The findings of a new taxation report has recommended that small business owners utilise the use of self employed contractors, which they estimate could saves SME’s more than £2 billion in tax. The ‘Tax Action Report’, which comes from financial advisory website Unbiased.co.uk, does also warn small business owners to be clear on HMRC rules regarding the use of self-employed contractors.
It has been reported that more workers are opting to become self employed, working as contractors and freelancers, representing around 6% of the UK’s workforce. With the current economic climate many SME’s could be keen to reduce employment costs by hiring workers on a contract basis.
The figure of £2 billion tax savings was calculated by Unbiased.co.uk on that fact that national insurance contributions would be much lower for those working as self-employed on a contract basis rather than being directly employed. They did however warn that employers need to be aware of IR35 rules and other new employment rules regarding ‘disguised employees’.
Commenting on the ‘Tax Action Report’ Unbiased.co.uk’s Chief Executive, Karen Barrett, said that tax can be a “vast and complex subject”, especially for small business owners. She continued; “Our Small Business Tax Action Report reveals that by utilising self-employed workers better, SMEs could be saving tax payments but it also highlights that tax can be a bit of a minefield!”
Ms Barrett spoke about how using professional financial advisors is vital for SME’s to help them understand tax liabilities and to ensure that they are not crossing the line into tax evasion. She finished by saying that as well as taxation advice, experts such as ICS “can also free up your time, allowing you to focus on what you do best – running your business.”
ICS work with a team of experts in employment and tax law to ensure our services are fully compliant with existing IR35 legislation and the latest government regulations, such as the AWR. You can contact us now for a tailored proposal based on your individual circumstances as a contractor.