Tax Write Off’s for Contractors and Small Business Owners

Tax Write Off’s for Contractors and Small Business Owners

Our esteemed friends working in the Revenue want you to pay them as much taxes as possible. Typically, we save our IT and Engineering Contract clients at least €100,000 in taxes over 20 years.  Infinity Financial Planning try to help contractors, directors and employees to get better organised financially. Our aim is to help you minimise your taxes and increase your bank balance.
Most people are busy working long hours. Successful people use financial planners like ourselves to help identify ways to legitimately make the most of what you earn. From our 35+ years in Financial Planning we have picked a few tricks along the way which we would like to share with you:

Small Gift Exemption and Other Perks

Let’s start with possibly the best perk. A €500 single voucher may be provided, to any employee or employer, without applying PAYE, PRSI and USC to that benefit. This is called the small gift exemption. It is allowed annually.

The small gift exemption is available to employees, contractors and company directors alike.

Below is the following additional examples of how you can pay yourself:

  1. Salary
  2. Professional memberships, journals and books
  3. Mileage Allowance, at Revenue Rates
  4. Subsistence Expenses, again at Revenue rates
  5. Further Education, if improving required skills
  6. Retirement plan contributions
  7. Bonuses and Benefits such as paternity leave, and maternity leave
  8. Employee Benefits such as income protection and death in service
  9. Foreign travel expenses, if you spent all of your time abroad on business!
  10. Small gift exemption

Tax Write Offs for Contractors and Directors of Limited Companies

So now that we’ve covered the good parts about how you can pay yourself best let’s look at the legitimate ways to minimise your personal and corporate taxes. Start-up costs vary in amounts and are likely to include items such as:

  • Advertising, utilities, office supplies, and any other business-related purchases.
  • Office rent is an obvious deductible expense.
  • Home office space is deductible by the square foot in proportion to liabilities, with certain limits, which need to be discussed with your friendly accountant.
  • Printers, copiers, paper, desks, software and filing cabinets are examples of hardware as business expenses.
  • Internet, email services, website hosting, software programs, postage, stationery are some more of the the obvious ones.
  • Food, coffee and kitchen maintenance items can all be claimed reasonably.

If time-sheets and expense receipts were important when you were an employee, then they are vitally important if you are a contractor, for either an umbrella company or even personal limited company.

Umbrella Companies

By the way, an umbrella company is a ready-made Limited Company that is owned and managed by an accountancy firm. The Umbrella Company acts as an intermediary between the contractor and their employer. Your umbrella company provider needs to keep your tax compliant.

The next most important job is to submit invoice’s on your behalf to your place of employment. How quickly payments are made to your personal bank account from said company account is a good barometer of the quality of service you will receive. How long you intend on being a contractor will dictate if you are going to be a PAYE employee of the umbrella company or a director of this ready-to-go limited business.

Professional Services Roles in Medical, IT, Financial and Engineering Industries

Most people we deal with are looking for assistance in implementing some or all of the 10 ways to maximise your personal wealth above. We don’t just look after money, we look after people we deal with as if the money was our own. If you are busy with life, and struggling to figure out the best options for you, just let us know. Our job is to help you get financially organised, minimising your tax liabilities and maximising your wealth.

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See what our financial planning experts can do for you.

Will I go contracting? – Contractors Financial Advice

Will I go contracting? – Contractors Financial Advice

Why is contracting popular?

The choice of moving from permanent to contracting employment is becoming a popular option. Contractors need impartial financial advice.

We are in a world that seems to be moving faster than ever, while giving the impression that it is becoming a smaller place – if that makes sense? Some of the reasons for making the switch to contracting, according to our clients, include work location flexibility. The freedom and flexibility to take some time out between projects is often another considered advantage. The opportunity to gain exposure to different industry sectors, and experience of cutting edge projects, are just some additional benefits for the risk contractor’s take.

Becoming a contractor is particularly suitable for careers including Business Analysts, Project Managers, Technical Support, Software Development and Database Analysts. Contracting offers a more lucrative option perhaps to permanent employment. The reason for this from an employer perspective includes the fact that a contractor needs to provide their own employee benefits package, and hence may get a lucrative contract as compensation.

 How do we Help with Contractors Financial Advice?

 Our job is to help people make good financial decisions. We provide contractors financial advice in the following areas:

1. Calculate your cash-flow.

2. How to Minimise Your Taxes.

3. Help you Accumulate Wealth in Your Business.

4. Protect Your Income in All Circumstances

Dealing with your pension on leaving employment

If you are leaving employment and were a member of an occupational pension scheme, you may have a number of decisions to make regarding your pension benefits. On leaving service you are entitled to a statement of options regarding what you can and cannot do with your accumulated pension. You will receive this statement from the administrators of your pension scheme. The problem is it may be up to 6 months after you leave service.

With your consent, as your financial planner, we can act in your best interests and help provide your options with regards to pensions for contractors, a lot quicker than 6 months.

Have you more than, or less than, 2 years service?

If you have less than two years of service, you should have the possibly appealing option of a refund of your own contributions (though not your employer’s), which are taxable. If you have more than two years’ service you will not be entitled to a refund of contributions. However you will be entitled to choose between:

  • Retaining your benefits with the scheme or
  • Transferring your benefits to:
  1. A new Contractor’s Occupational Pension Scheme
  2. A Personal Retirement Bond
  3. A PRSA – this option is restricted.

So, in summary, perhaps you would like to consider if you can extract some cash from your previous employments retirement funds, while giving yourself the exposure and the opportunity’s of contracting. For those of you looking for help on calculating how lucrative contracting could be check out Deloitte’s calculator, or contact us on the form below and we will help you further.

Ready to get start a conversation?

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Our Latest Blog Posts

Tax Write Off’s for Contractors and Small Business Owners

Tax Write Off’s for Contractors and Small Business Owners

Our esteemed friends working in the Revenue want you to pay them as much taxes as possible. Typically, we save our IT and Engineering Contract clients at least €100,000 in taxes over 20 years.  Infinity Financial Planning try to help contractors, directors and...

Brexit & UK Pensions explained by Certified Financial Planners

Brexit & UK Pensions explained by Certified Financial Planners

Brexit & UK Pensions Brexit and your pensions, how does it affect you? Britain is expected to formally trigger Article 50 of the EU within weeks, beginning the process of leaving the EU. Have you worked in the UK pre Brexit? If the answer is yes, Brexit may affect...

Brexit & UK Pensions explained by Certified Financial Planners

Brexit & UK Pensions explained by Certified Financial Planners

Brexit & UK Pensions

Brexit and your pensions, how does it affect you? Britain is expected to formally trigger Article 50 of the EU within weeks, beginning the process of leaving the EU.

Have you worked in the UK pre Brexit?

If the answer is yes, Brexit may affect you more than you might think. You may not heard of QROPS? The UK 2017 Spring budget introduced an upfront, 25% tax on the value of the fund, on certain pension transfers. The UK government have introduced this measure to prevent transfers to exotic destinations, eg Hong Kong, that might facilitate access to the full fund while paying little or no tax.

Brexit and your pension

Currently, if you have pension funds left in the UK, you can still transfer from the UK pension scheme to a Qualified Recognised Overseas Pension Scheme (QROPS) and avoid any tax liabilities to HMRC (Her Majesty Revenue and Customs) on transfer, where:

  • Both the individual and the pension scheme are in countries within the European Economic Area (EEA) or
  • If outside the EEA, both the individual and the pension scheme are in the same country, or
  • The QROPS is an occupational pension scheme provided by the individual’s employer.
Changing Circumstances

If your circumstances change within 5 tax years of the transfer, HMRC will reconsider the the tax treatment of the transfer. The changes will take effect for transfers requested on or after 9 March 2017. The UK government will also legislate in Finance Bill 2017 to apply UK tax rules to payments from funds that have had UK tax relief and have been transferred, on or after 6 April 2017, to a QROPS. Furthermore, UK tax rules will apply to any payments made in the first 5 full tax years following the transfer. This is regardless of whether the individual is or has been UK resident in that period.

Brexit The Implications

The implications of Brexit negotiations could have potential ramifications for further restrictions and conditions to claiming or maturing your pension pot in the UK. For this reason, we would be inclined to agree with our many clients who are non-UK resident holders of UK pension funds that is time to remove as much ownership, accountability and responsibility from HMRC as possible.

What to realise

It may be beneficial to transfer your UK pension,  to a non-UK jurisdiction, for tax efficiency and perhaps currency considerations. Historically, the QROPS has been a ‘single premium’ structure which means overseas business is kept administratively separate from, say your local Irish pension provision. Have you ever worked in the UK? Do you have dormant pension funds in the UK?

Ready to get started?

See what our financial planning experts can do for you.

Why would an employer provide benefits for their employees?

Why would an employer provide benefits for their employees?

Employee benefits

Employee benefits for contractors and employees vary greatly, even if they are working under the one organisation. Approximately 20% of employees have privately arranged Income Protection Insurance, and 50% of employees have sufficient levels of Life Cover for their dependents. Knowing that you and your family will be looked after should the worst happen is a valuable benefit and certainly not one that an informed contractor, employee or employer should give up easily.

 The complete benefits package

Life cover, and other additional insurance benefits, can be provided on a group basis. Group life, and in particular group disability cover, could be a key element in properly valuing and retaining loyal employees. It can also free an employer from any implied moral duty that they may feel towards their employee should they be affected by death and/or disability when they already have a solution in situ.

Why would an employer provide Group Risk benefits for their employees?
  1. An employer can write off the full cost of providing the benefits against corporation tax.
  2. It is an attractive, and relatively cheap, benefit that the employer can offer current and future employees.
  3. The underwriting requirements for group risk assurance are much less stringent than for individual policies.
  4. Typically, based on the size of the group, a not insignificant level of the cover can be provided without medical evidence.
  5. The employee’s details only need to be provided at scheme setup, and again at renewal, this makes administration a lot simpler.
  6. As the cover is organised on a group basis, costs are significantly lower than equivalent individual policies.
  7. An employee must be able to meet an actively at work declaration, which for a new scheme usually means no absences of more than three consecutive days in the previous six months.
  8. Administration for the employer is much more straightforward than purchasing equivalent policies for each individual employee.

The full range of protection products available under a group risk package include:

  • Death in Service (Life Cover) – This can be a multiple of salary or a fixed lump sum. In addition the payment can be made as a spouse’s pension or as a children’s pension.
  • Income Protection – This pays a monthly income if an employee is unable to work for a prolonged period due to illness or injury – essentially protecting the employee from loss of income.
  • Pension Contribution Protection – This ensures contributions continue to the employee’s pension plan, even if they are on long term sick leave.
  • Group Serious Illness – This pays a lump sum if an employee is diagnosed as suffering from one of number of specified serious illnesses.

Does your employer look after you and your family? Or are you the contractor, if so, you are also the employer.

For more information contact us on your choice of email or phone details below.

How do I keep track of my pensions today?

How do I keep track of my pensions today?

How do I keep track of my pensions?

Like most people you may have moved jobs a few times in the past. As you change jobs you may start to accumulate pension benefits in different employer pension schemes. When you leave a job you will have to decide what to do with the pension benefits you may have built up in your former employer’s pension scheme, one of the more popular options is a personal retirement bond but there are also other options available to you.

3 Options for keeping track of your pensions

  • Leave the benefits to grow in that scheme until you retire. This may result in difficulties when it comes to your retirement. You will most likely need to go back and try and contact these former employers to gain access to your pension benefits.
  • Transfer your benefits to your new employer’s pension scheme, if you will be joining such a scheme. You will get these benefits when you retire from your new employer.
  • Transfer your benefits to a Buy Out Bond (also called a Personal Retirement Bond). A series of Buy Out Bonds in your name can become the hub for all the pension benefits you may have accumulated over the years at your different jobs.

Choosing the right options

Choosing the right option can be a daunting task. At Infinity Financial Planning we will explain the choices available to you in simple language helping you to make an informed decision.

Our Experts will guide you through the process of helping you to make sense of your various options both now. Infinity Financial Planners will also discuss the drawdown options at retirement. We can assist you in developing a well-researched and diversified investment strategy. This will be compatible with your attitude to and capacity for risk and designed to achieve your goals as far as possible.

Personalised Service

Our Certified Financial Planners can provide a personalised service where we will get to know you, your financial needs, attitudes to and capacity for investment risk and ultimate goals. We will guide you through the basic elements of investing – risk and return, diversification and your own attitude to risk. Our Certified Financial Planners will ensure you understand what’s at stake.

Get in touch.

Got a question or query? We would love to hear from you. Please use the form below to send us a message and we will be in touch with you.

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