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

Self Employed? Check your liability when accepting benefits.

Author: Emily Edwards

When acquired as a service provider, obtaining added benefits through a customer can turn the subject of tax a very tricky one. Dependant upon the kind of the benefits gained, it is easy to become drawn into a situation in which you closely appear to be a salaried worker of the business compared to a contractor.

For example, if, as a contractor, you recognize benefits such as: a company motor vehicle, pension contribution and freehold, it is possible for a person's tax status to alter for every one of them. Carrying out your own bookkeeping is rarely basic, so guarantee you’re attentive of these issues when agreeing to new projects.

Each reward is addressed separately resulting in a complex mixture of tax guidelines and claims. In the situation of a staff member the apartment, the reward would be calculated and confirmed by the business on a P9D. However, someone who is independently employed would not have the P9D, resulting in the problem of whether or not they calculate and declare the advantage independently in their SA return?

As an employee of the company, a pension contribution is a non-taxable bonus but whether this applies to a freelance service provider is a different question. Is the freelance worker similarly entitled to this tax settlement or is it instead something to be qualified as supplemental earnings? Pending a final decision to pay out tax on this donation, would they also be required to pay tax on their own pension contribution? Could they be labeled net or gross?

The vehicle subject is just as complex, as its tax status will depend on gross earnings of the employee. This would apply in principle to the freelance contractor also, but if regarded as taxable, how would they work out the taxable advantage? Whether or not they ought to comply with similar process as that of a standard member of staff is questionable but in the end, where it would be announced on the SA return is a puzzle unto itself.

In the end, accepting benefits far above common payment practices can create a tax problem for everybody involved. Whether you use a cheap accountant or not, the standing of rewards should identified at the start of the purchase process, obviously identifying whether they are delivered as additional income or otherwise. Ensure you to request clarity over such issues to avoid your own tax nightmare.
Emily Edwards works for Cheap Accountants 'Eze & Associates'. Offering professional accountancy services as well as advice and assistance in the complex financial market.
Article Source: JS2 Article Marketing


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