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Contractors & Freelancers - What will I earn?

You may have spent your entire working life earning a PAYE salary but now you are the boss, who pays you?

Working for your own limited company will allow you to receive money in three different formats. These are: salary, dividends and expenses.

Salary – you will become an employee of your own limited company, this will entitle you to receive a salary. The salary we recommend is a small amount, usually aligned with your annual tax-free personal allowance. This salary can be paid from the company on a monthly or annual basis depending on what suits you best.

Dividends – dividends will make up the majority of your income. Dividends are paid from the profit your company makes. Dividends are extremely tax efficient – in 2014/15 our clients could potentially have received £28,305 for no additional tax! Dividends can be taken from the business as regularly or infrequently as you like, providing the company has made sufficient profits.

Expenses – as you are an employee of the business, you are entitled to be paid for any out-of-pocket expenses you incur in carrying out your work. In contrast to a PAYE employee, you can claim mileage for travelling to and from work

Free Resources
Gorilla Guides
- Company Formation
- Limited or Umbrella?
- Contractors & Freelancers - What will I earn?
- Gorilla Accounting Guide to Expenses
- What is IR35?
- Flat Rate Scheme Explained
- 24 Month Rule Explained
- Guide for New Employers
- What is an Umbrella Company?
- Getting Started as a Contractor
Take Home Pay Calculator
Relevant Life Insurance for Contractors
IR35 and Public Sector in 2017
Autumn Budget 2017

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