Have you been asked by your agency to transfer to their umbrella company or set-up your own Limited company?
Do you want to know why?
In this year’s Finance Act the government changed the legislation for people who are self-employed and working through an agency.
Despite the fact that you meet all the criteria for self-employment, the government have decided that you are not really self-employed – hence the name given to the legislation of “false self-employment”.
Because of this legislation, your agency may be caught with a high income tax bill on your services. Not surprisingly the agencies do not want to take this risk and so they are asking all their self-employed agency workers to either take their income as a salary (and suffer tax and national insurance as an employee) or to set up their own Limited company.
There are many nurses, although the legislation would apply to doctors as well, that work as self-employed often getting work through a mixture of agency work and other private work. You will no longer be able to do this.
What is the most tax efficient solution?
The most tax efficient structure is to form your own Limited company. This is not difficult but you may find it useful to talk to an accountant before going online at Companies House to form the company.
Once your company is set up you will be able to open a company bank account and then sign a new contract with your agency in the company’s name.
Running a company is a little more complicated than being self-employed but once you get used to receiving a salary and dividends each month from your company you will wonder why you waited so long to make the tax savings on offer.
If you would like help is setting up your new Limited company and guidance and help in preparing and keeping your paperwork in order then please contact Clearways Accountants on 01737 244298 or through the contact form below. We have plenty of experience in helping medical staff set-up and run their own Limited companies.