Contractor information

An HMRC compliant payment solution

Working with Contracta provides a compliant payment solution that conforms to current HMRC legislation. You are not subject to IR35 and our solutions have been reviewed by legal counsel.

IR35 Advice for contractors

As a self employed contractor, you will not be affected by IR35, regardless of your contract status.  We also strive to stay up to date with any changes in legislation, to ensure our solutions change in line with your needs.  Our solution offers a return of up to 85% of your billed rate and takes care of the paperwork that affects contractors who subscribe to other solutions.

Background to IR35

IR35 was introduced on 6 April 2000. The legislation was introduced to prevent individuals from taking advantage of a corporate structure to lower taxes, when the government believed they should have been taxed as a standard employee.

IR35 states that apart from certain expenses, all money received by the contractor should be subject to Schedule E and class 1 NIC, thereby essentially exclusing most dividend payments and many business expenses.

Where a contract is deemed to fall within IR35, the amount remaining after allowed deductions is classed as salary, subject to PAYE and NI for the tax year. If the contractor fails to correctly account for PAYE and NI, they are subject to substantial penalties and interest.

The Contracta Contractor Benefit Trust

The Contracta Contractor Benefit Trust (CBT) allows you to work as a self-employed contractor, retaining up to 85% of your gross income as take home pay.

As a leading payroll specialist, Contracta is committed to providing the most up to date, compliant and retention-friendly payroll solutions to clients and have developed the CBT Scheme with our tax and legal partners to provide our contractors with a structure that offers compliancy and tax efficiency. The CBT Scheme is the first of its kind and the only current compliant solution that will enable you to retain up to 85% of your gross income.

You can read more about the Contracta CBT Scheme here.

The Limited Company option

For many self-employed individuals who are not subject to IR35, the option of a Limited Company is available, allowing you to benefit from being paid a salary and dividends. As a Limited Company Director with a good accountant, you could receive just over 70% of your gross income.

If IR35 does apply to your contract, your income would be subject to National Insurance and PAYE tax, giving you a lot less in gross retention.

The UK Umbrella Company option

If you are deemed to be subject to IR35, you could join a UK Umbrella Company. Using this vehicle, you would be subject to paying full PAYE tax and NI on your Gross Contract Value, resulting in you retaining approximately 63% of your gross income.