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The tax year-end is 5th April. Whether you are inside or outside IR35 there are various important dates you must remember:
19th April - payment due for 2001/ 2002 PAYE contributions including PAYE due on the deemed salary
19th May - Last day for submission of P35's. If you are unsure of your deemed salary at this point, mark the P35 provisional and make your best estimate of the tax and NI due. The penalty for late filing of this form is £100 per month for each month or part thereof you are late
6th July - Last day for submission of P11d's. Again the penalties for late filing are £100 per month
19th July - Last date for payment of Class 1a NI contributions
31st January - Filing deadline for Personal Tax Returns, and any amendments to provisional P35's.
As you can see these deadlines are quite tight, therefore you should get any information requested by your accountant to them as soon as possible.
There are various planning opportunities you need to take advantage of before year end:
1. Make sure you make any pension payments before year end - they must be processed by your pension Company before 5th April to be allowable in this tax year;
2. Take advantage of the £7,000 limit for ISA's. Every individual over the age of 18 can invest in these and the income and capital growth is entirely tax free;
3. If your spouse does any work for your Company and they have no other income, consider paying them a wage to use up some or all of their nil rate tax band;
4. Make sure you use up all of your basic rate tax band (your total gross income can be £33,935 before you pay any higher rate tax, but remember dividends are grossed up for these purposes by 1.111);
5. If you do have a Company car (we strongly advise against it), and you are near the mileage limits consider any other business journies you can undertake before year end to push up the miles and therefore reduce the benefit in kind (the mileage figures are 2500 miles for the first threshold and 18,000 miles for the next). IR35
Despite the best efforts of the PCG and others it looks as though IR35 is here to stay. There is a call for Gordon Brown to repeal the legislation in the budget (17 April), but it seems highly unlikely he will do this.
What is important now is structuring your business in such a way that you fall outside IR35. First and foremost you need to look at your contract. Ideally it should be project based with the duties clearly and precisely laid out and a clause to say that you cannot be asked to work on anything outside of the scope of those duties. Other important clauses are the right of substitution, non mutuality of obligation, not having fixed working hours and something to say that if you are responsible for any defective work you will put it right in your own time and at your own expense.
For the business as a whole you should be seen to be advertising your services, have your own stationery and insurances, a dedicated business telephone line and office and submit tenders/ quotations for work, thereby generally to be seen to be running a business, rather than simply providing consultancy services through an agency.
With proper representation, the co-operation of your agency and a properly structured business, passing IR35 will be a realistic possibility for the vast majority of contractors.
The PCG has pledged to back suitable cases before the Special Commissioners so that there is more certainty on what constitutes a pass or fail. These are likely to be highly publicised with the details analysed at length, so keep an eye out as the same sorts of conditions could be applied to you.
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Simon Dolan
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Simon Dolan from SJD Accountancy gives Shout99.com the low-down on the most important financial dates for contractors as well as additional information on IR35.