Unique Original Articles » Self Employed? Check your liability when accepting benefits.

Self Employed? Check your liability when accepting benefits.

Author: Emily Edwards

When employed as a service provider, obtaining rewards through a client can turn the matter of tax an incredibly complex one. In accordance with the type of the benefits gained, it is rather simple to get drawn into a situation wherein you closely resemble a member of staff of the business in stark contrast to a contractor.

For example, if, as a contractor, you receive perks such as: a company vehicle, pension payment and accommodation, it is possible for an individual's tax condition to vary for each one of them. Performing your own accounting for contractors is hardly ever hassle-free, so guarantee you are aware of these factors when agreeing to new tasks.

Each and every bonus is addressed independently producing a sophisticated mixture of tax rules and statements. In the case of a staff member the apartment, the benefit would be determined and reported by the corporation on a P9D. However, someone who is self employed would have no P9D, producing the problem of whether they evaluate and declare all the benefits independently in their SA return?

As a member of staff of the business, a pension contribution is a non-taxable profit but whether this applies to a self employed consultant is a different problem. Is the independantly employed worker just as eligible to this tax aid or is it instead something to be qualified as extra earnings? Pending a decision to pay tax on this donation, would they also be required to pay tax on their own pension contribution? Are they labeled net or gross?

The vehicle issue is similarly intricate, as its tax position is dependent upon gross earnings of the worker. This would apply in principle to the self employed contractor additionally, but if regarded as taxable, how would they determine the taxable bonus? Whether or not they ought to follow precisely the same practice as that of a typical member of staff is questionable but ultimately, where it would be stated on the SA return is a puzzle unto itself.

In the long run, taking benefits far above typical payment means can produce a tax nightmare for anyone concerned. Whether you use a chartered accountant or not, the status of perks should outlined at the beginning of the tender process, evidently defining whether they are supplied as extra income or otherwise. Make sure to obtain clarity in such situations to avoid your own tax horror.
Emily Edwards works for Small Business Accountants 'Eze & Associates'. Offering professional accountancy services as well as advice and assistance in the complex financial market.
Article Source: JS2 Article Marketing


Spinit

All articles are submitted by users, we take no responsibility for the content of any articles. Users have given permission for others to use these articles in exchange for credit in the form of a link back to the author's website. For removal requests please contact us at http://www.jetpackedsupport.com