Professional Services Surcharge

Q. I am a contractor trading through a Limited Company. I have recently heard that the company may have to pay additional taxes if I am deemed to be conducting “professional services” through my company. Is this correct?

10th June 2016

There is a Revenue rule that imposes an additional tax on top of the usual 12.5% corporation tax rate in certain circumstances. This is known as the professional services surcharge.

 

The rules do not define what the term “profession” means but the following list is indicative of the types of services that could potentially fall foul of this rule. This is by no means an exhaustive list and what constitutes a professional services company would require careful consideration by your accountant.

  • Accountant
  • Actor
  • Actuary
  • Archaeologist
  • Architect
  • Auctioneer/Estate Agent
  • Barrister
  • Computer programmer
  • Dentist
  • Doctor
  • Engineer
  • Journalist
  • Management Consultant
  • Optician
  • Quantity Surveyor
  • Solicitor
  • Veterinary Surgeon

If you are deemed to fall within the definition of a professional services company then a surcharge of 15% of half of the profits of the company which are undistributed (i.e. not taken from the company by means of a salary/dividend) is imposed and added to the annual tax bill of the company.

 

Disclaimer: Advice shared in this blog is intended to inform rather than advise. Taxpayer's circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this forum, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.

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Or submit an enquiry