If you're a contractor who can work outside of IR35, working through your own limited company is by far and away the most tax efficient option for you.This is often referred to as operating a Personal Services Company or PSC and would see you become the director of the limited company.By doing this, you can take your income as dividends which aren't subject to National Insurance and also benefit from a lower tax rate than PAYE income.You can also claim tax relief on a wider range of expenses. The result is higher take home pay than with any other service.As the director, you have complete control over your company's finances and all for just one monthly fee.PayStream's My PSC service provides you with all of the accountancy and administrative support you need, including setting up the company, invoicing, tax returns and much more.So there you have it, hopefully you've now got a better idea about working outside of IR35.
Contracting gives you plenty of options in terms of how you choose to get paid and pay tax – our top tips could help push you in the right direction.If you're new to contracting, running a limited company could be daunting, so a good idea could be to use an umbrella company.They're really simple to join, easy to use and are perfect for short term contracts. Getting paid this way also means you can claim tax relief on any expenses you incur during your contract.But if you're a contractor already, you might want to consider using a limited company. They are without a doubt the most tax efficient way of working. You can claim more business expenses and take home over 80 per cent of your top line.