Five tax tips for independent contractors

If you’re a self-employed contractor or freelancer, following these five handy tax tips will help you cut down on your tax bill.

Self-employed contractors can reduce their tax bill by looking out for viable ways to save money.

Self-employed contractors can reduce their tax bills by looking out for simple measures to save money.

  1. File on time.
    The first and most effective way to save on your tax bill is to file your returns and make payments on time. The penalties for filing late are pretty hefty (£100 right off the bat if you’re even a day late) and completely avoidable.
  2. Save, save, save.
    Put money aside during the year to pay your year-end tax bill if you suspect that your earnings might go over the higher income earnings rate. This way, not only will you earn some interest, you’ll also be prepared if a tax bill comes your way once you’ve submitted your Self Assessment return.
  3. Claim a refund.
    Many people are unaware that they are due tax back and lose out on hundreds of pounds simply because they don’t bother to apply. There are a number of reasons why you might have overpaid tax. The best thing to do is apply for your refund through a reputable, established tax refunds company like 1st Contact Tax Refunds, which works on a “no refund – no fee” policy.
  4. Claim expenses.
    Take full advantage of any expenses you can claim. These often include equipment, repairs and courses you attend, as well as certain household or travel expenses if you work from home or travel for your work.
  5. Go limited.
    If your turnover is £20,000 or more you may benefit from setting up a limited company. Setting up a limited company will also allow you to make full use of all annual Personal Allowances, such as your tax-free savings allowance and pension contributions. Using these allowances can often mean the difference between passing into the higher rate tax bracket at the end of the tax year, or not.

If you need assistance in setting up a limited company, visit 1st Contact Accounting