Danbro has created a useful guide to help contractors and temporary workers affected by changes introduced in Gordon Brown’s March Budget.

We have produced the Guide to Managed Service Companies Legislation for recruitment agencies and their freelance clients who may operate through a Managed Service Company (MSC).

MSCs typically provide administrative services, produce invoices and receive payment for work carried out. Prior to the Budget, they paid contractors a small salary, with the rest in dividend payments, which reduced their tax bill and National Insurance contributions (NICs).

The MSCs must now operate Pay As You Earn (PAYE) and deduct tax and, from 6 August, Class 1 NICs from income earned by its contractors.

As an accountancy practice, we are exempt from MSC legislation and offer a range of services that can help contractors to operate in the most tax-efficient way. These include:

• Umbrella companies – a service fully approved by the Inland Revenue

• A range of limited company options.

This new legislation is complex and contractors are strongly recommended to seek the advice of a qualified, professional accountant or financial adviser to make sure they do not foul of the rules.

For a copy of the guide click here.