What is a Limited Company Contractor?

As a Limited Company contractor you have more control over your finances and taxes, and you’re responsible for managing your own payroll and invoicing. It’s a dynamic way to work, offering flexibility and potential tax advantages.

Limited company contractors and tax compliance

If you are working through your own Limited Company, you will be aware that the Government has stringent anti-tax avoidance legislation.

To comply with this, you will need to provide proof of:

 

  1. Your Limited Company being registered in the UK
  2. Being the Director and majority shareholder of the company
  3. The company’s bank account being in the UK.
    Please note the Isle of Man is not under UK jurisdiction
  4. You being sufficiently insured for the duration of the assignment

Frequently Asked Questions about Limited company contractors

What is IR35?

IR35 is HMRC legislation designed to prevent tax avoidance by contractors who are supplying their services to clients via an intermediary (i.e. an agency).

  • If an assignment is deemed Inside IR35, the agency must deduct PAYE and NI tax at source prior to paying your limited company.
  • If an assignment is deemed Outside IR35, the agency will process a gross payment to your limited company and the limited company will remain responsible for tax deductions.

From 6th April 2021, your IR35 status will be determined by the end client. When we advertise and discuss an assignment with you, you’ll be advised if the role is Inside or Outside of IR35. If you’re working for a Public Sector organisation, you will be aware that the IR35 rules are already in place.

For more information on IR35, visit:  gov.uk/guidance/understanding-off-payroll-working-ir35 and gov.uk/guidance/check-employment- status-for-tax

How do you set up a limited company?

If you’re looking to set up a Limited Company, we recommend that you seek independent advice. We are not qualified to offer financial or practical guidance in this area.

If at any time you wish to amend your Limited Company details, we require a minimum of two weeks’ notice in writing. Email this to your consultant and copy in the Payroll Team at Payroll.query@rgfstaffing.co.uk.

How do you get paid?

As a Limited Company Contractor, we will work with you under a self-bill agreement. This means that you will not have to raise invoices. We’ll issue a Limited Company Remittance advice, which will act as the invoice.

When you work with us as a Limited Company Contractor, we remit full rates to the limited company, covering statutory costs, and they then pay you.

Payments are made once we have receipt of an authorised timesheets and is paid weekly in arrears. Ensure timesheets are submitted by 5pm Monday following the week worked to ensure payment is released on the Friday.

What about tax deductions?

All payments to Limited Company Suppliers who are Outside IR35 will be inclusive of tax and NI contributions.

It is the Limited Company Supplier’s responsibility to ensure these are paid to HMRC on time.

We do not offer tax advice, or take responsibility for any Limited Company Supplier’s failure to pay their tax commitments on time.

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