April 2021 has been and gone, and after a year of delays, the new IR35 rules have now come into effect. The world of contracting didn’t implode, but many contractors are still adjusting to the new way of working, so don’t worry if you’re one of them.
While it felt like contractors had much more control of their tax status prior to the changes, there’s still a way to ensure you’re not unduly penalised – Flex. This unique service makes navigating the realities of working in both a limited and umbrella capacity within the same year more straightforward.
A tale of two contractors
Take our two contractors for example – Tim and Tom – who work in a very similar way, with one exception. Tim has chosen to go it alone, while Tom has opted to have Flex on his side, as he works a combination of contracts that are both inside and outside IR35.
When it comes to fees, Tim has to pay separate fees and doesn’t receive any joined-up advice, because he has to go to two different companies. Tom, on the other hand, pays one fee for the two services and benefits from joined-up advice, because everything is all together, and he can therefore receive proactive complete advice.
One thing that hasn’t changed under IR35 is the need to complete a tax return. Tim is spending his evenings collecting all the information together from both his accountant and his umbrella company to present to HMRC. Tom, on the other hand, is free to read his daughter a bedtime story, because Flex automatically combines his limited and umbrella income to make his tax return simple.
Tim must proactively communicate any contract changes to his accountant and umbrella company, adding yet another task to his to do list. If his employee status isn’t updated correctly, he risks getting an increased taxed bill in future. Tom isn’t thinking about his IR35 status, because he knows his joined-up solution updates automatically.
So many people approach tax reactively, but to make contracting as lucrative as possible it’s important to plan for the future and not miss any opportunities. While Tim is unaware of the possibilities, as part of Flex, Tom is receiving personal recommendations from tax and financial experts, enabling him to create an effective tax plan.
Get transparency of your finances through a single platform
At the centre of Flex is the Connect portal, where all of your umbrella PAYE payslips and limited company accounts come together in one place. Here you can oversee the state of your finances in real time, seek advice and make decisions based on up-to-date data. This will allow you to remove additional tax obligations and use pension contributions and salary sacrifice schemes to maximise your tax opportunities.