IT Contractor FAQs - Frequently Asked Questions

Can I gift a share in my company to my wife? Are there any tax consequences?
The issue of splitting limited company shares with a spouse or partner has been the subject of much confusion and debate over the past few years.

If I want to close down my limited company, can I extract any remaining profits tax efficiently?
If you are considering closing down the company you have used for contracting, we look at how any remaining profits can be extracted in a tax efficient way.

What salary should I pay myself as a limited company contractor?
One of the most commonly asked questions asked by limited company contractors is what salary should you pay yourself?

How is net take home pay calculated for umbrella company employees?
One of the most frequently asked questions by umbrella company contractors is how much income they will receive after all deductions have been made?

If the number of status enquiries is so low, why bother taking out IR35 protection?
Last month, HMRC published data which showed that there had been a startling drop in IR35 status enquiries in recent years. With this in mind, why should contractors bother taking out contract reviews and IR35 insurance protection?

Umbrella companies - what are special expenses dispensations?
If my umbrella company has a special dispensation for expenses, does this mean they can save me tax?

Contractor travel expenses - what is the 24 month rule?
An explanation of the 24 month rule with respect to contractor travel and subsistence expense claims.

Can I download an IR35 contract from the web?
Why compliance with IR35 involves a lot more preparation than simply downloading an IR35 contract from the internet.

How does a PAYE umbrella scheme operate in practice?
If you join an PAYE umbrella company, how does a typical scheme operate?

Income protection insurance - should my limited company pay the premiums?
What is income protection insurance?, and would a contractor be better off taking out a policy via their own limited company, or on an individual basis?

Do I need professional indemnity insurance cover?
Do you need to take out contractor PI insurance policy?, and how to make sure you are adequately covered.

Why don't IT contractors set up as sole traders?
The most popular way to start up in business in the UK is as a sole trader. So why do IT contractors avoid this route, and work via their own limited companies or via an umbrella company scheme?

How do I move from an umbrella company to my own limited company?
David Houston explains why switching between an umbrella and a limited company should be a fairly straightforward process,

How are limited company dividends taxed?
Limited company contractors, who fall outside IR35, draw income in the form of salary and dividends. How do you work out your tax liability on the dividends you declare?

Does my limited company have to appoint a secretary?
From April 2008, since the introduction of an initial wave of Companies Act 2006 legislation, limited companies no longer have to appoint a company secretary.