How To… Maximise Take-Home Pay and Optimise Tax Efficiency

As a contractor in Ireland, you have more control over your take-home pay than traditional employees. However, with great control comes great responsibility! To ensure you’re getting the most out of your hard work and high earnings, it’s always good to use an accountancy and tax solution that maximises your take-home pay. Luckily, with some smart planning and the right strategies, you can keep more of what you earn. Here’s a guide to help you make the most of your take-home pay as a contractor while remaining fully compliant. (If you would like to calculate your take home pay as a contractor in Ireland, try out our take-home pay calculator!) 

1. Increase Take-Home Pay With The Right Company Structure 

The first step to maximising your take-home pay is by selecting the best company structure to operate in for your situation, such as a Personal Limited Company or an Umbrella Company. The most tax efficient option for you depends on your specific circumstances and contract role. 

• An Umbrella Company: This is ideal if you’re new to contracting or have a short-term contract role (i.e. 3 months), as the umbrella company is an easy to use, cost effective accountancy and tax solution with quick, free setup. It also includes company insurances.
• A Personal Limited Company: Is suitable for long term or career Contractors and offers maximum financial flexibility. A Personal Limited Company allows you full flexibility to build your professional brand, employ a family member/subcontract work, purchase a company car or other company large assets, retain funds in the company, maximise your pension, and includes Company Insurance at no extra cost.

Tip: Consider your long-term contracting goals. If you’re in it for the long haul, setting up a Personal Limited Company can be worthwhile. Book a call to discuss the benefits of Personal Limited Companies and the set up process. 

2. Claim Allowable Business Expenses 

As a contractor, you can claim a variety of business expenses that will reduce your taxable income, which means more money in your pocket, increasing your take-home pay. Our award-winning app and portal makes it easy to upload your expenses quickly and efficiently. All you need to do is upload a photo of your receipts and invoices, and they are kept safely on the app. Here are some examples of common business expenses that you may be entitled to claim depending on your circumstances: 

• A portion of mobile phone, home phone & home internet usage 

• Postage & stationery

• Training courses related to your field of expertise 

• Home office equipment 

• Computers, laptops & tablets 

• Costs of trade magazines & subscriptions 

• Professional subscriptions & business memberships 

The above expenses must be relevant or necessary for your contract role and may depend on your personal circumstances so it’s always best to consult your Dedicated Account Manager or book a call with a member of the team for any queries you may have. 

Increase Take-Home Pay With Pension Contributions 

It’s never too early to start a pension and it doesn’t need to be a big monthly payment. Contributing to a pension is not only a way to secure your future but also a smart tax strategy because as a director of an Umbrella Company or Personal Limited Company you can process the pension contribution through your company as a legitimate expense and claim a tax relief at approximately 52%. Have a chat with our experienced pension advisors over at Contracting PLUS Financial to explore the best options for your circumstances with advice delivered jargon-free. If you are a current client make sure to take advantage of your Free Annual Financial Review for a chance to discuss any query you have on Pensions, Income Protection, Savings Plans and Investments with a financial advisor and improve your long-term financial security.

Stay on Top of Tax Deadlines 

Missed deadlines can lead to penalties and interest charges, which eat into your hard-earned income. To avoid this, make sure you’re aware of all relevant tax deadlines for filing returns and paying taxes. However, when you are a contractor your time is valuable so it’s best to consider working with an accountancy and tax expert for assistance with this. When you sign up with Contracting PLUS, your Dedicated Account Manager will ensure you are aware of all the tax dates you need to know. 

Consult a Professional For Free 

What solution is best for one contractor might not be suitable for another. Working with a professional who specialises in contractor accounting and tax can get you tailored advice that’s perfect for your situation and maximises your take-home pay effectively. A small investment in professional advice can save you thousands in the long run. 

With Contracting PLUS you’ll get a Dedicated Account Manager who will be your guide, with proactive advice on maximising your take home pay, available by phone or email to answer any questions you may have (and the good news is you are never on the clock, this is all part of our service)! If you’d like to calculate your tax, check out our handy tax calculator, and discover your potential income as a self-employed professional.

Schedule a free consultation with our expert team at Contracting PLUS or ring us on (01) 611 0707.