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In our recent article explaining the recent changes to contractors’ claims for tax relief on travel and subsistence, we briefly covered what is meant by “supervision, direction, and control” as a test to distinguish ‘false self-employment’. There hasn’t been a great deal of guidance provided by HMRC, but using the Employment Status Manual, we hope to provide a little clarity on what the new rules mean for UK contractors. 
The VAT Flat Rate Scheme (FRS) allows small businesses with a turnover up to £150,000 to calculate the amount of VAT they pay back to HMRC as a fixed percentage between 5% and 14.5%, instead of the standard 20%. The amount payable is calculated based on the type of business you have. 
Contractors in the UK may have heard recent rumblings of new legislation placing restrictions on claiming tax relief on travel and subsistence. The dreaded “IR35” will take effect from this month (April 2016), but what do the changes mean for you? 
Investing in a pension personally allows you to benefit from tax relief at your highest marginal rate but you must draw the contribution as salary and dividends. However you can also invest directly via your company which not only saves the hassle of drawing out the funds but also reduces your corporation tax bill without any benefit in kind considerations. 
Many business owners are unaware that they may be able to put life insurance through the company as a legitimate tax-deductible business expense. Not only that, if the policy meets certain conditions, it is not treated as a benefit-in-kind so there is no National Insurance or personal tax payable. Win, win! 
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