Unbiased.co.uk, the professional advice website, warns SME owners to be clear on HMRC rules regarding the use of self-employed contractors. As part of its Tax Action Report, unbiased.co.uk estimates that SMEs could save as much as £2 billion in tax by utilising self-employed contractors, but highlights the need for professional advice to avoid falling foul of HMRC rules on tax avoidance.
The tax savings result from the fact that National Insurance contributions differ depending on whether workers are employed or working as self-employed on a contract basis. Based on an assumption that around 15% of higher rate tax payers could transition to self-employed status, unbiased.co.uk estimates that SMEs could benefit from National Insurance savings of around £2 billion every year as a result. But unbiased.co.uk highlights that SME owners have to ensure they are clear on the rules – to avoid utilising ‘disguised employees’ and being accused of tax avoidance.
‘Disguised employees’ are those leaving a company to become self-employed while effectively continuing to be employed on a more or less full-time basis by that company, for the sole purpose of reducing the company’s tax liabilities.
The unbiased.co.uk Tax Action Report looks at the overall amount of tax SMEs waste by not making use of tax breaks, and tax efficient ways of running a business, highlighting an overall tax wastage by SMEs in the UK of £7.1 billion. As part of this campaign, unbiased.co.uk highlights the importance for SME owners of seeking professional advice from an accountant or independent financial adviser (IFA) to make sure their businesses are running as tax efficiently as possible while at the same time making sure they remain on the right side of HMRC’s rules and regulations.
Karen Barrett, Chief Executive of unbiased.co.uk comments: “Tax is a vast and complex subject and it can be hard for business owners to find the time to understand how to optimise their tax status whilst also running their business day to day. Our Small Business Tax Action Report reveals that by utilising self-employed workers better, SMEs could be saving tax payments but it also highlights that tax can be a bit of a minefield!
“A professional adviser can help you to understand your business’s tax liabilities, make sure you are using any tax breaks available to you and make sure you are not crossing the line into tax evasion. They can also free up your time, allowing you to focus on what you do best – running your business. To find an accountant or IFA for you or your business, go to www.unbiased.co.uk for a free and confidential search.”
You can search for an accountant or IFA near you by visiting www.unbiased.co.uk.
Notes to editors
All calculations are based on unbiased.co.uk’s SME TaxAction Report
For more information contact:
Karen Barrett, Chief Executive, unbiased.co.uk: 020 7833 3131
Lisa Grando/ Emily Falla/ Maddy Morgan Williams, Lansons Communications: 020 7294 3682
For expert commentary or case studies from over 200 media-friendly IFAs, journalists should visit www.unbiased.co.uk/bluebook.
About unbiased.co.uk, the professional advice website
The unbiased.co.ukportal is a free and confidential UK-wide search matching consumers with local professional advisers: ‘find an IFA’, ‘find a mortgage adviser’, ‘find a solicitor’, and ‘find an accountant’. These searches enable consumers to find professional advisers by postcode, area of specialism, qualification and payment method. In 2011, unbiased.co.ukfulfilled around 450,000 searches for local, professional advice.
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