Can anyone explain.....becoming a consultant Q

[Harryburgundy]

Can anyone explain the tax implication/benefits of becoming a consultant...both for the business engaging the consultant...and the consultant.
Does that make sense?

 

[Mr Panda]

The consultant may be self employed and therefore pay tax.

The consultant may be part of a larger Consultancy Organisation - and still pay tax.

:cry:

 

[Harryburgundy]

Mmmm...in a very quick conversation with someone the implication was that as a self employed consultant i can off set mucho personal expenditure thus reducing tax burden.

 

[pete_mcc]

It depends on what you do. If you are a consultant who is employed by one company only (ie a contractor) then there is no tax break as HMRC considers you as taxable at PAYE levels as you are effectively a full time employee. If you mean that you will go around working for several companies offering consultative support then the best option is to set up a limited company and pay company tax on your companies earnings, pay yourself a dividend on you profits and then pay much lower income tax on the remainder. With a limited company you also have the option of writing off many things as an expense (cost of computers, part of rent/mortgage paid if your offices at home).

The key though is to have multiple clients not just one key one, the hmrc will look for that as the number of 'consultants' who are basically employees of companies who have been made redundant and reemployed in their old roles as contractors has rocketed in recent years.

Big bit of advice is to get an accountant. It will cost up to a grand a year but will save you three times that and he will advise you of all the advantages.

 

[Harryburgundy]

Thanks Pete, that confirms what I have heard so far...particularly the multiple company thing. Having a word with a clever accountant soon.
Cheers
Carl

 

[letmetalktomark]

Mrs LMTTM works freelance/consultancy for the same company she works for day to day but in an out of ours role.

She is technically classed as self employed for the out of ours work.

We have a family member who is an accountant. If we were inclined we could put through so much through "the business".

However, we don't. :roll:

No tax breaks but perks, yes.

 

[The Ken]

Harry as a consultant remember to charge more for your time than your current salary as you will have to cover any sickness and holidays yourself along with paying for the accountant and any liability insurance you might need.

 

[john]

Some good advice here, as others have said the best bet if you decide to go down this route is to take on an accountant.

Generic advice regarding setting up as a sole trader or limited company > http://www.bytestart.co.uk/content/19/1 ... le-t.shtml . Under current tax legislation it is more benficial to setup as a limited compnay if self employed assuming a reasonable level of income.

Either way good luck!

 

[lewis1641]

dont be fooled into thinking that being self employed or a lomitted company gives you carte blanche to claim everything as expenses.

my mate had his wrist slapped for claiming hus lunch.

his argument, you cant work if you are dead.

didnt wash with the tax office...

 

[john]

dont be fooled into thinking that being self employed or a lomitted company gives you carte blanche to claim everything as expenses.

my mate had his wrist slapped for claiming hus lunch.

his argument, you cant work if you are dead.

didnt wash with the tax office...

Good work

Lunch seems to have it's own special tax rules. I know in a former career working for a large corporation when away on business we were unable to claim expenses for lunch (taxable benefit or somesuch) but dinner was no problem. Then again worked somewhere else when we claimed for everything whilst away including lunch and the odd evening beverage (strictly in moderation of course).