Invoicing question
Discussion
Interesting one here - I have a Ltd Co. and one of the client wants to pay me a bonus (£1000 net) for a certain piece of work they were particularly happy with.
Ignoring the potential IR35 issue for the moment (!!!), how could I invoice this? Note it says "net". They have suggested that I attach their letter to an expense claim but it's definitely not a legitimate expense.
I asked my accountant and she said I need to add on top personal tax, employees NI, employers NI then corp tax (and VAT of course) and treat the £1000 as if it were salary, then invoice the gross figure of around £2,600 but I'm not sure this is right either. Plus, that will raise some questions from the client as to why I'm invoicing £2600 for a £1000 bonus. Any suggestions?
Ignoring the potential IR35 issue for the moment (!!!), how could I invoice this? Note it says "net". They have suggested that I attach their letter to an expense claim but it's definitely not a legitimate expense.
I asked my accountant and she said I need to add on top personal tax, employees NI, employers NI then corp tax (and VAT of course) and treat the £1000 as if it were salary, then invoice the gross figure of around £2,600 but I'm not sure this is right either. Plus, that will raise some questions from the client as to why I'm invoicing £2600 for a £1000 bonus. Any suggestions?
Bonuses are normally paid to employees - so it's best that it is not described as a bonus at all.
As your business would normally invoice its customers for the income it receives, then you should raise a normal; sales invoice to cover this amount - and add the appropriate VAT element to it as well.
As your business would normally invoice its customers for the income it receives, then you should raise a normal; sales invoice to cover this amount - and add the appropriate VAT element to it as well.
Might be best to politely thank them for their kind offer but explain that it is not possible for them to pay you "net" as your tax position is not simple to explain. I'd mention that your accountant suggested that they would need to pay you around £2600 to get close.
I'd then suggest invoicing them for an additional £2000, call it what you like, "Temporary Emergency Support Cover" would work for me for example.
I'd then suggest invoicing them for an additional £2000, call it what you like, "Temporary Emergency Support Cover" would work for me for example.
sgrimshaw said:
explain that it is not possible for them to pay you "net" as your tax position is not simple to explain.
Why make it sound like you're doing something dodgy/out of the ordinary? OP- can't you simply speak to the client and say 'I can't put it through as expenses so I'd have to put it through as an invoice. £1k net is approx £2.5k gross - are you happy with this?'?
A lot depends what he means by net.
Couldn't he simply mean £1000 plus VAT?
Failing that he could be talking about a pure gift of cash? Technically declarable I suppose but...yeah right.
Or did he specifically want you to take-home £1000 after putting through your books and taxing it legitimately?
Couldn't he simply mean £1000 plus VAT?
Failing that he could be talking about a pure gift of cash? Technically declarable I suppose but...yeah right.
Or did he specifically want you to take-home £1000 after putting through your books and taxing it legitimately?
I would raise them an invoice for £1,000 +Vat for Additional services as agreed and then your company pays you the £1k less tax and N.I. Of course you won't go home with £1k, but it's nice your client recognises the extra good work you've done, and the last thing you want to be seen doing is stitching him up for "the extras".
ColinM50 said:
I would raise them an invoice for £1,000 +Vat for Additional services as agreed and then your company pays you the £1k less tax and N.I. Of course you won't go home with £1k, but it's nice your client recognises the extra good work you've done, and the last thing you want to be seen doing is stitching him up for "the extras".
Not knowing what your business is doesn't help, but, if you invoice (as above) then you have the opportunity for your Ltd Co to either pay you £1000 less deductions, or you can see if there's £1000 of expenses you might claim on your company, or perhaps something worth £1000 your company can purchase for your benefit (employee welfare fund?)...With a little imagination you should be able to find a way to get the value, if not the actual notes. Sales trip to Bali?
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