ListenToTaxman.com

UK PAYE Tax Calculator / Salary Calculator

The number 1 free UK salary calculator tax calculator since 1998. Calculate salary, national insurance, HMRC tax and net pay

Revenue to toughen up on Self Employed

The Government has called for tougher measures on those registering as self-employed in order to avoid paying more income tax.

Inland Revenue to launch tougher checks on the self-employed In February Student Loans CEO Ed Lester was added to the payroll forcing him to pay tax and National Insurance contributions after it was revealed that he saved £40,000 a year in income tax by being paid through a private agency, a move initially supported by Government ministers.

Following last week’s budget, those registered as self-employed are now under scrutiny as Inland Revenue launches tougher checks. Many high earners are currently being paid through their own Personal Service Company in order to avoid paying income tax on their earnings. Instead they pay the much lower rate of corporation tax.

Under the Intermediaries Legislation IR35, freelancers are described as having multiple sources of income and no fixed employment, but there is still no official definition of a ‘Personal Service Company’.

Freelancing body PCG has criticized the Government’s lack of clarity in the matter. “PCG would have liked to have seen the Government publically expand on the plans for “making IR35 easier to understand” as the detail is crucial for freelance businesses” says John Brazier, PCG managing director.

Industry experts have claimed that this lack of definition has allowed HMRC to use IR35 to their own benefit as these reviews may lead to interest or penalties for those involved.

In a recent response to a freedom of information request by MP David Mowat the BBC has admitted to having 3,000 self-employed staff not including the number who are exempt from responding to FOI requests. The Guardian reports that this includes 41 who annually earn over £100,000. A BBC spokesman has said that all tax arrangements are dealt with by the individual in line with HMRC legislation.

This article was published in our News section on 27/04/2012.

Some Guides you may be interested in

  • Scotland Vs England And Wales: What Are The Differences In Tax? There are significant differences to how much tax you pay in Scotland in comparison to England.
  • AirBnb vs long-term-rentals For the holiday maker & professionals alike, it’s safe to say that short-term let platforms - such as AirBnb, Flipkey, or Homeaway - have been a bit of a game changer.
  • Bookkeeper v Accountant Are you paying your accountant to prepare your books? Could you save some money by hiring a bookkeeper? Clare Doherty explains the key differences…
  • 5 Tax changes that may affect you this year Following the start of a new tax year, it’s always useful to stay abreast of changes to your responsibility. Certain legislative updates in 2019 have been overshadowed by the spectre of Making Tax Digital for VAT, causing smaller (but significant) changes to be overlooked.
  • Top Ten Claimable Expenses for Limited Companies Let’s start with a thought experiment. I’ll set the scene. You’re a limited company owner, and you, as the director, are the sole employee. You also - understandably – love learning about tax. You open up the Monday morning paper to find some exciting news - HMRC has hinted there are going to be some big changes in the upcoming UK budget.....
  • Salary vs Dividends A guide to tax efficient remuneration for Limited Company directors for 2019/20.
  • What changes to buy-to-let mortgage interest tax relief for landlords? Undoubtedly the biggest source of tax confusion for prospective landlord clients that we speak to here at TaxKings relates to the changes to tax relief for residential landlords, introduced by the UK Government in April 2017.
  • Top Ten Year-End Tax Planning Tips for Small Businesses Tax planning for small businesses is not always straightforward, in fact it can be a serious minefield for the unwary. The chances are however that you and your business could almost certainly pay less in tax, with help from your tax advisor. Here are some tips to get you started.
  • Making Tax Digital for Small Businesses Making Tax Digital for VAT (MTDfV) comes into effect from 1st April 2019. With Chancellor Philip Hammond announcing in his 2019 Spring Budget that MTD for other taxes will not be mandated until at least 2021, all of our focus is now on the VAT implementation.
  • End of Tax Year planning - Use your Allowances to reduce your tax bill. Last minute Tax Planning. Our guide to what annual allowances you have and how to use them to reduce your tax bill.

More from our News section