Contracting is a commercial term for the basis upon which your "employer" is taking you on and doesn't confer any automatic tax status. There are a few options
- PAYE employee, you could be employed on "contract" but still be a PAYE employee of either the client or of the employment agency that place you.
- Sole Trader, you could register with the Revenue as a sole trader, although this isn't to be recommended as the Revenue are actively clamping down on this, it is only suitable for people who are genuinely self employed, ideally with more than one client. If you are working for one client, turning up each day at the same site to carry out your duties, the Revenue will regard you as an Employee and not Self Employed which will lead to problems for you and your "employer".
- Personal Limited Company - have a company setup with you as the owner and director. You would be a PAYE employee of this company and would invoice your client for the services provided.
- Umbrella Company - used by many contractors who don't want to set up their own company. You would become an employee of the umbrella company and that company would deal with all VAT/PAYE/PRSI issues. If using the services of an umbrella company watch out for companies charging on a percentage basis, look for fixed fee arrangements or it could become very expensive!!
Regarding your question on expenses, if you are anything other than a PAYE employee of the client/agency it will be possible for you to claim expenses for business related costs to reduce your tax bill. The cost of travelling to/from work each day is generally not allowable, and the purchase of IT Equipment is more likely to be regarded as Captical Expenditure, i.e. you claim a capital allowance over several years rather than writing it off in one year.
Regards
podowd
www.prima.ie