Taxation for Contracting Role

seek30

Hi,
I was wondering if anyone out there could help me with a few questions.
I am currently considering going for a contracting role however the whole tax system totally confuses me as I have had some conflicting information.
I will be commuting 170k a day - is there anyway I can claim the cost of this travel back as an expense.
Am i better off as a PLC / director of an umbrella company or employee of an umbrella company.
I realise that as an employee I keep my entitlement to jobseekers allowance but if I do become unemployed would jobseekers benefit not equal this ?

Any advice would be great

Thanks
Seek30

srsly78

Get an accountant and make your own company. Don't bother with umbrella company (ripoff and creates extra hassle with expenses). Yes you can claim loads of expenses, accountant will give you proper advice.

Proprietary director: Can only get means tested social welfare. Does not pay 10.5% extra employers prsi contribution.
Employee: Pays stamps towards dole, can get JSA. DOES pay extra 10.5% tax if using umbrella company.

Accountant will confirm all of the above for you. Yes you can be self-employed without an accountant, but this is not recommended.

AnthonyCasey

As @srsly78 says, stay away from Umbrella companies. Not only are they expensive and not very tax efficient but Revenue are also now challenging the PRSI treatment of the director/employees. If Revenue win their challenge, they may seek employers PRSI of > 10% from all umbrella co's for all their employees for the past number of years. Potentially a huge liability!
Best route is to incorporate your own company.

bittihuduga

what are the differences in being a director of a umbrella company and having your limited company?
i was told that the list of expenses that can be reclaimed does not change.
there is a small change in tax credits but it is not significant.
only advantage is i can take what ever salary i want per month if its my own company. but it does not matter because you will be taxed whenever you take that salary.
am i right in my understanding?
i dont see much difference here. but i always hear people talking that having limited company is best option

Lombardo86

FWIW as a director of a company you CAN NOT claim that 170k journey to work as an expense.

You can claim ADDITIONAL journeys outside the basic to/from work leg.

srsly78

The advantage is you don't have to pay the umbrella company loads of money. Instead you can opt to pay an accountant a much smaller fee. Then you have freedom to do whatever you want with your company, unlike the former arrangement. The umbrella imposes a very rigid way of doing things, so much that if creates work for you to do mailing them stuff all the time. Yes you do have to keep records and receipts in either case.

AnthonyCasey

One of the key difficulties with Umbrella companies is that you do not know your co shareholders or your co directors. As a director you are responsible for the way the company is managed & run. You may be liable for the behaviour of the other directors (who you do not even know) and for the actions of the Umbrella co providers. That is a big risk in the current financial climate.
In addition the Revenue Commissioners are arguing that the contracting shareholders are not in control of the Umbrella companies and that Employers PRSI of 10.75% is chargeable.
Incorporate your own limited company and retain control over your own affairs. There are plenty of real time online accounting solutions to facilitate your financial and tax management of your own company.

srsly78

Lombardo86 wrote: »

FWIW as a director of a company you CAN NOT claim that 170k journey to work as an expense.

You can claim ADDITIONAL journeys outside the basic to/from work leg.

Yeah but no but yeah. Your main place of work is your home office, contracts are just temporary arrangements and can be claimed. This is what every contractor does.

Lombardo86

srsly78 wrote: »

Yeah but no but yeah. Your main place of work is your home office, contracts are just temporary arrangements and can be claimed. This is what every contractor does.

Yeah but no but yeah but no

Please Note
Mileage to and from work base is not allowable

Taken directly from my accountants site. Maybe it depends how you're set up.
Like i said initial to and from work base (if you're in same office daily) can't be claimed. Additional trips can

srsly78

Yes and that is exactly why your main work place should be your own office, not your customers.

Advice taken from my accountant -.-

Lombardo86

srsly78 wrote: »

Yes and that is exactly why your main work place should be your own office, not your customers.

Advice taken from my accountant -.-

OK point taken! I'm not sure it is allowed in a lot of positions though, not in my case anyway

bittihuduga

i agree with lombard. if you are doing IT contracting where you are based at your clients office, you are not allowed to claim travel expense. your home is just a home office and your base office is always your clients office

srsly78

Not so simple when you throw working from home and international business trips of varying lengths into the mix. I even know some consultants that insist on having 2 customers, and not working a full week in one place.

Also this: http://www.taxsaver.ie/ Everyone can expense travel to some extent, it's only a big deal if you are claiming massive mileage.

Grolschevik

bittihuduga wrote: »

i agree with lombard. if you are doing IT contracting where you are based at your clients office, you are not allowed to claim travel expense. your home is just a home office and your base office is always your clients office

This is what I've been told too.

bittihuduga

Any suggestions for accountants with knowledge of managing IT contractors?