Tax for Individuals / February 23rd 2017

Contractors: What you need to know about your tax status

Over the last few years, tax issues in this area have become more and more complex. It is now more important than ever to have a basic understanding about your tax status and how it affects your position. What is a Personal Service Company? A personal service company, or a PSC, is when a single individual incorporates a limited company and invoices clients through that limited company. A personal service company tends to comprise of one individual who will be the only shareholder and director, more often than not only having a single client. Commonly, the individual who becomes a contractor had previously worked as an employee of their client. This approach is popular for service providers who leave their employment to commence contracting on a ‘freelance’ basis.  The reduced rates of tax (via dividend, salary and pension planning), increased daily rate and the ability to obtain tax relief on expenses often results in a significantly better ‘net’ position for the individual. (more…)

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