Workers who operate as a limited company contractor have a great deal more responsibility over their finances than individuals who are employed by an umbrella company, which means that there are several key dates throughout the year they need to be aware of to ensure they are remaining compliant with HM Revenue and Customs (HMRC).
So, we've compiled a guide to just a few of those that are worth contractors jotting in their diaries.
Personal Tax returns
Limited company contractors are required to complete a personal tax return. These documents detail the amount they have earnt throughout the year, as well as how much tax and national insurance has been paid by them to HMRC.
Paper returns had to be with HMRC by midnight on October 31st, while those that are filled out online need to be completed by midnight on January 31st. However, a reminder letter including the deadline should be sent out by HMRC to ensure workers are aware that they need to fill out their tax return.
Significant penalties are in place if the 31 January 2017 deadline is missed, with individuals being required to pay £100 even if their form is just one day late. If the Tax Return has not been filed by 1 May 2017, a £10 penalty is applied for each day it remains unfiled for the following three months, meaning an individual could be faced with a fine of up to £900 in addition to the initial £100 charge. For returns that are six or 12 months late, an individual will be required to pay either £300 or five per cent of the tax that is due - whichever sum is higher.
In light of this, it is of the utmost importance to ensure that personal tax returns are filed online with HMRC on time, keeping both the taxman and the contractor happy!
PayStream's Personal Tax Return service can help ensure your tax return's are filled out correctly and on time, so with the self-assessment deadline looming, why not turn to our tax team who will ensure your returns are completed correctly and on time to avoid HMRC fines.
The Chancellor delivers his annual Budget on 8th March 2017,meaning that any new legislation or changes will be ready to be introduced by the time the new financial year starts in April. Typically, the Budget will cover any changes to tax that will affect employees and companies, as well as possible rises in the tax placed on certain goods, such as alcohol and cigarettes.
It is an important date for limited company contractors and others who work on a self-employed basis because if they aren't using an accountancy service provider, such as PayStream, they are likely to have to deal with deducting their own tax and national insurance from their wages each month, so it is important they are aware of any potential changes affecting this to ensure HMRC is receiving the correct sum from them.
In the most recent Autumn Statement, it was announced that plans for IR35 changes for the public sector are set to go ahead in 2017. Please click here for more information on what was covered.
The financial year - also sometimes referred to as the tax year - begins on April 6th, running for the next 12 months. This is the period for which a worker's tax and national insurance contributions apply, so it is important for limited company contractors to ensure that they are up to date with their payments by this time so as not to get into any trouble with the taxman.
For business purposes, this may simply be referred to as 'the tax year', so contractors need to make sure they are not confusing this with the actual January to December calendar year in their work.
If you're struggling to keep track of all these dates or you aren't the most financially-minded of people, it would be a good idea to get in touch with PayStream to help you out and make sure you stay on the right side of HMRC.