Quick Guide Contractor Limited Company Tax

In a Nutshell

Unavoidable

In a Sentence

You know what they say about Death & Taxes, well its true and best handled by accepting the fact even contractors have to contribute to HMRC.

Working people pay income tax relative to their gross salary. As an employee of your contractor limited company you will be paid a net salary. Your employer (your limited company) will calculate your income tax and National Insurance Contributions.

Director Tax

As a director of your contractor limited company you will have to complete a Self-Assessment tax return, including any dividend income. This has to be done by the 31st January following the end of your limited company's tax year.

Contractors, like all workers, have to pay two lots of National Insurance Contributions. One half is charged to the individual - Employees NIC, the other half is paid for by the limited company - Employers NIC.

Accountants Role

You will appoint a specialist contractor accountant to help you with calculating what tax you owe. They will take into account the tax-free element of your income and the varying rates of income tax and NIC.

You will be told what you owe, who to make the payment to and when the payment has to be made. It's important you heed their advice to avoid late payment penalties. Normally, you will have to make payments once a quarter.