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If you’re an offshore contractor, managing your finances efficiently can be a challenge, especially when dealing with tax regulations. Working with a specialised accountant at Gorilla can help you to streamline financial management, ensure compliance, and maximise your earnings.
As an offshore contractor, you have to navigate the usual things that those who are self-employed must be aware of, such as changes to National Insurance, IR35, Making Tax Digital and self-assessment deadlines. However, industry changes to offshore working also need to be taken into consideration.
One thing that offshore workers are conscious of is the decarbonisation of the UK economy, which may affect the way contractors in certain industries work. There have been calls to the government to maintain an industrial base, to continue building the economy and support jobs and incomes of workers in these industries and this week, RMT, Britain’s Specialist Transport Union, has welcomed the Climate Change Committee’s (CCC) latest report on decarbonisation.
The report calls for clear guarantees on jobs, pay and conditions for workers in offshore energy and transport. It also emphasises investment is needed to encourage a transition towards public transport, rail freight, and coastal shipping.
This comes after worries of exported jobs, pay cuts, and replacing skilled works.
The Make Work Pay plan is a core part of the mission to grow the economy, raise living standards across the country and create opportunities. It aims to tackle low pay, poor working conditions and poor job security. The Labour Government has introduced offshore skills passports, but the sector still has concerns over the application of the Make Work Pay reforms and how it affects those working in the energy sector.
The plan is designed to help more people to stay in work, support workers’ productivity and improve living standards.
One thing you can control as a contractor in the energy industry is your fair wage, by choosing to work on projects with a set contractual pay in place, which is a highlight of self-employment. However, job security and finding your next contract can be worrying.
With this in mind, it could be time to appoint a specialist offshore contractor accountant, who can keep on top of legislation changes and help you keep your finances in order. If you’re a contractor, it is so important to manage your finances to account for any gaps in contracts or lulls in employment, allowing you to continue paying your monthly outgoings.
There are so many reasons as to why appointing an expert accountant is the correct next step in your career.
Why Offshore Contractors Need Specialised Accountants
Offshore contracting comes with unique financial responsibilities. Whether you’re in the oil and gas industry, wind, engineering, catering or IT, working in different jurisdictions means dealing with international tax laws and taxation and compliance requirements. A specialised accountant can provide:
- Tax Efficiency: Helping you optimise your tax liability legally while ensuring compliance.
- Compliance: Keeping you up to date with UK tax laws and offshore regulations.
- Currency Management: Advising on the best strategies to manage foreign earnings.
- IR35 Advice: Ensuring your contracts align with legal and financial best practices under the IR35 legislation.
Financial Tips for Offshore Contractors
1. Choose the Right Business Structure
Determining whether to operate as a limited company or sole trader can significantly impact your tax liabilities, admin and financial responsibilities. A specialist accountant can advise you on the best structure for your specific circumstances.
If you’re looking to become a limited company, company formation may be on your to-do list, which Gorilla can help with. Forming a limited company can be daunting but Gorilla’s team of company formation experts can assist you with forming your limited company, handling the whole process from start to finish. The service includes:
- Registration with Companies House
- Certificate of incorporation
- Memorandum and articles of association
- Share certificates
- A business bank account from Mettle by NatWest
- VAT registration
Gorilla have helped thousands of self-employed people set up their limited companies and can assist you every step of the way.
2. Understand Double Taxation Agreements
Many offshore contractors worry about being taxed twice on the same income. Double taxation treaties (DTTs) between the UK and other countries can help prevent this. A knowledgeable accountant can guide you on how to claim tax relief and file necessary forms with HMRC.
By using Gorilla Accounting, you can make sure your tax returns are completed in a timely manner with no errors. As one of the most financially rewarding sectors to work in, especially as a contractor, there are lots of opportunities to choose projects to work on for multinational corporations across the world.
Although the nature of working in this sector can mean spending extended periods offshore, lengthy shift patterns and long-distance travel, the returns are lucrative. Getting your take home pay right is important to ensure your efforts are rewarded.
3. Maintain Proper Financial Records & Efficient Expense Management
Keeping accurate records of invoices, expenses, and tax filings is crucial. Your accountant can help you implement a digital bookkeeping system to stay organised and prepared for audits.
Knowing what expenses you can claim can save you significant money. Offshore contractors can often claim:
- Travel and accommodation costs
- Equipment and software
- Work-related training
- Insurance premiums
Your Gorilla accountant will ensure that you’re claiming all legitimate expenses while complying with tax regulations.
At Gorilla, we partner with FreeAgent, a cloud-based accounting platform that allows you to access your accounts at any time, on any device with an internet connection. You are able to get a comprehensive, real-time overview of your financial position and health of your business.
The host of features can save you time and make life so much easier, and the cost is all included in your fixed-fee package. Admin becomes effortless, leaving you with more time to focus on your day to day and growing your business.
Through FreeAgent, bank transactions can be uploaded through automated bank feeds. You can also upload receipts and manage your bookkeeping, and create personalised invoices and payment reminders that can be sent automatically after a set time period.
4. Plan for Tax Payments in Advance
Using FreeAgent with your Gorilla Accountant also means that your VAT and self-assessment returns are prepared and can be electronically submitted to HMRC. Preparation of your self-assessment tax returns are included in your fixed-fee accountancy package.
Planning for tax payments throughout the year, not just before the 31st January deadline, is incredibly important. Unlike salaried employees, contractors are responsible for their own tax payments. Setting aside money for tax and National Insurance contributions in advance prevents financial surprises. Your accountant can provide tax forecasting to help you budget accordingly.
We will also advise you on different measures you can take to make sure your payments are as tax-efficient as possible.
5. Stay Compliant with IR35 Regulations
IR35 is designed to combat tax avoidance by contractors working as disguised employees. If you provide services through a limited company, ensuring IR35 compliance is crucial. A specialist accountant will assess your contracts and provide advice on minimising risks.
Inside IR35 – If you get the same benefits and have the same responsibilities as a permanent employee, then it’s likely that you’re inside IR35. If you are operating inside IR35, you must pay the same National Insurance Contributions and income tax, taken care of by your employer through PAYE.
Outside IR35 – If you are being paid through your own limited company, then it is likely that you will fall outside IR35. Your client will pay your business and you can choose how you structure your income. You have the responsibility for paying the correct National Insurance Contributions and tax yourself which can be the most tax-efficient structure.
6. Professional Financial Advice
A specialist Gorilla accountant does more than just file taxes, they provide strategic financial planning that ensures long-term financial stability. Regular communication with your accountant can help you adapt to changing tax laws and economic conditions, as well as keeping on top of your accounting and tax.
After you have appointed Gorilla as your accountancy firm, you will be assigned your own dedicated accountant who will get to know you and your set up, offering you unlimited support and professional advice on a wide range of accounting practices including tax planning.
7. Navigate Making Tax Digital (MTD)
Making Tax Digital (MTD) is a UK government initiative aimed at transforming the tax system by requiring businesses and individuals to keep digital records and submit tax returns electronically. As an offshore contractor, MTD will impact how you manage your financial records and tax obligations.
- Digital Record-Keeping: You will need to use HMRC-approved accounting software to maintain accurate and up-to-date financial records.
- Quarterly Tax Reporting: Instead of annual tax returns, contractors may need to submit financial information to HMRC every quarter.
- Greater Transparency: The move to digital tax submissions ensures better accuracy and reduces errors, but also means that HMRC will have greater oversight of your financial activities.
A Gorilla Accountant can help you transition smoothly to MTD-compliant processes for your offshore company, ensuring that your tax records are up to date and fully compliant with HMRC’s new digital regulations.
Offshore Contractors & Gorilla Accounting
Managing your finances effectively as an offshore contractor requires expertise in taxation, compliance, and financial planning. Appointing an accountant who specialises in offshore contracting ensures that you remain compliant while optimising your earnings.
Whether you’re looking to minimise tax liabilities, claim expenses efficiently, or manage currency fluctuations, working with a knowledgeable accountant can provide peace of mind and financial security.
If you need expert accounting services tailored to offshore contractors, get in touch with our team today on 03301079674, or get an instant quote on our website.
