Hi guys - this one is new to me to a degree and my partner hopes your input may help her....
She has a job starting via a third party employment firm that supply an automotive firm
She has been told she can go pays via the employment agency or she believes she has the option to be classed as a LTD company.
She has been told by the person who left the position prev (who went through the pause option) that another worker who did the Ltd option was much better off.
The position is office based as a PA to a director
Very little travel other than to and from set point of work
What are the pros and cons?
She’s excited but also tepid as (like me to a degree) doesn’t fully understand the implications.
I thought for example if you were a LTD company you can’t pay yourself a wage or such month as you are paid by dividends - Hercules look at when they are taken and s monthly one is classed as salary etc?
Also she’s been told can claim her fuel back and lunches back? I believed this was squashed over 12 months ago, and even then you could only claim the taxable part back?
Confused dot com.....
Please can any pros help?
My initial advice is ring HMRC for a steer and if sounds OK get further advice from an accountant. The reason - I suspect this agency is suggesting a Ltd company is because a whole raft of 'contractors' (who packaged themselves as self-employed) were hit by the the revenue last year for up to 6 figure sums to recoup tax going back many years. Should be a thread on this site G&D.
Speak to your accountant.
Benefits for the employer, and also potentially for you as a couple, dependent on your overall tax position.
Need to keep paying RICS if if you want full state pension.
Probably more qualified people on here to advise.
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I'm a contractor and have been working through my LTD company for years, before I set it up, I used to work as PAYE (paid by the agency) and for a while through an umbrella company. I'll try to help here, but if she has more specific questions, you're welcome to message me.
If she goes PAYE, the agency will pay her, minus standard income tax and national insurance, the advantage is that she'll accrue holidays, but this is only the agency holding back percentage of her wages so they can pay her when she isn't working, don't think it's a 'free' benefit.
As a limited company, the company would pay her the minimum wage that will ensure her NI credits are accrued (for state pension etc), which I think is about £100, but it has changed, so if you want an accurate figure, let me know and I'll check some paperwork. The remainder of her earnings are paid as dividends, which can be paid whenever she wants, monthly if she wants, however, the 2 points that are really important here, you pay less tax and NI and you can claim expenses, so you can earn much more than if you were PAYE.
But, there is a downside, you will need an accountant, and sometimes insurance, so you can have some expenses.
I don't want to go into anything more specific here, but as I say, happy to have a conversation.
To add, don't believe scare stories about being a contractor, if this is a short term job, she has nothing to worry about, people caught are usually doing something obviously wrong.
One minus point on the Ltd company front is that she wouldn’t get the employer pension contributions (presuming that she would get it through the PAYE option).
Parasol are one of the more reputable umbrella companies and offer various options, including a LTD company option. Worth taking a look https://www.parasolgroup.co.uk/help-me-decide/
And corporation tax needs not to be forgot, as with most things the hmrc are (slowly) catching up with people using LTD companies as a tax saving method, making it less favourable depending on the type/scale of business.As mentioned in previous posts you will need an accountantOriginally Posted by mrsammyp
Not necessarily true, you can submit your own accounts to companies house and the revenue, dependent on turnover.But, there is a downside, you will need an accountant,
You can save thousands on accountants fees by doing it yourself.
I've rarely seen such a collection of misinformed posts.
OP: This position is almost certainly inside IR35 & would very probably cause issues if you worked as a limited company. If you don't understand the alternatives offered then book some time with an accountant & have them explained to you.
You could start by reading some of the information here:
https://www.contractoruk.com/first_timers
This.
HMRC are seeking to apply IR35 (albeit wrongly in many cases) to people in senior specialist or professional roles where there is a high degree of autonomy. In the case of a PA, IR35 would undoubtedly apply in my opinion.
IR35 in the private sector isn't due until April next year, so who's spreading misinformation? IR35 legislation only applies (in its entirety) to public sector workers, which I doubt this is.
Don't overcomplicate what is a fairly simple decision.
That's not true, IR 35 has applied to all since 2000 or so.
The way it's enforced is changing in April 2020 in the private sector but you can't say that it doesn't apply now.
Cheers,
Adam.
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You're right, but for argument's sake, IR35 isn't effective for private companies. The current IR35 legislation in the private sector simply limits an individual to 2 years spent at any one client/location, at which point you need to make some changes.
As I said, it's only the public sector where it's implemented in its entirety, the current legislation has such little impact in the private sector, it's not worth worrying someone about it. The OP is after guidance, why confuse them with legislation that won't have any meaningful impact on them.
Again you are incorrect. The core issue of deciding whether a contract is inside or outside IR35 is not changing: it has always had the same parameters & has always applied to both public & private organisations. What is changing in 2020 is making the employing company responsible for the decision (with some provisos on company sisze). Given the very substantial penalties HMRC can levy many companies are simply deciding every contractor is inside & a PA position will certainly be so.
Just because many contractors at private companies have been getting away with claiming to be outside IR35 doesn't mean they have actually been so. If you think it's just about the 2 year time limit then you are incorrect.
There's a long thread on this on PH with a number of posters who are at the sharp end indicating they are dumping contractors who refuse to be classified inside & an equal number of contractors who think everything will be alright. Alarmingly there are also a number of companies who don't know there's a change coming.
The 24 month rule on expenses shouldn’t be confused with IR35, completely separate.
IR35 has been around since 2000. The enforcement has been pretty poor so most contractors have taken a punt and been lax around their working practices. The new rules which come in to play in April will follow what has happened in the public sector where the end client now determines and is liable.
If you read what HMRC have done with GSK and are about to do to Astra Zenica then they will go after big firms for big tax bills. The net effect is that firms will be more conservative.
Having read the OP, that role would be clearly inside IR35 and as such PAYE or an umbrella the most logical route.
A reasonable place to start would be here https://www.tax.service.gov.uk/check...for-using-tool
I’ve been working like that for years, as a ltd company I pay myself £671 per month that keeps you below the employers NI level and take a bit in dividends. Then she can claim expenses for travel and all the other things. I’ve just closed my company down as there’s a view all this is going to be stopped. It’s cost me 7k a year going on the books but they can’t say take the rest of the week off see you Tuesday.
Agency umbrella company’s are getting looked at in a dim light by HMRC as some of them don’t do what they should.
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I found the PH thread on the changes coming to the private sector in 2020. It's quite a lomg read:
https://www.pistonheads.com/gassing/...0&f=&t=1820447
The key is making sure you are taxed like an employee. If you follow that rule you won’t end up in trouble.
This.
I was a contractor via my Ltd company for a number of years from around 1999/2000. IR35 discussions and the definition of disguised employment took up a lot of my time then, even though I often had multiple clients at the same time and several of my own projects, and contracts were generally short term. I’m not sure that if I started again now I would (or would be able to) take the Ltd company route, given the changes since.
There’s plenty of factual and current information online.
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