starting a business/IR35
Discussion
hi guys, I used to be an IT contractor, and walked away at IR35, but now Im setting up an online bike supplies biz. So as a ltd co, will I still fall into the IR35 rule, or can I go back to dodging tax? Or shall I just stick to sole trader status?
advise appreciated (offline if you prefer)
advise appreciated (offline if you prefer)
As a Ltd Co you will be employed so pay PAYE plus corporation tax for the Company (in Arrears) you will also need to fill out a self assesment form for any other income you may receive and if so pay your tax on this partly in advance.
No escape
HTH Nick
edited to say :- probably best to stay Sole Trader until you earn over £35K pa, I'm not an accountant and just do as I'm told so you may want to ask yours.
>> Edited by Aprisa on Thursday 20th February 16:53
No escape
HTH Nick
edited to say :- probably best to stay Sole Trader until you earn over £35K pa, I'm not an accountant and just do as I'm told so you may want to ask yours.
>> Edited by Aprisa on Thursday 20th February 16:53
You wont fall foul of IR35 since from what you say you wont be working in anyway that could be construed as a disguised employee.
If you're Ltd Co. then you're a director and you'll be earning money selling goods, not at an hourly rate through an agent so you hav nothing at all to worry about w.r.t. IR35 as far as I can see.
(What is IR35??? where have you been? www.contractoruk.com/ir35-resources.shtml )
Errm.. actually if you don't know what it is, be thankful that you don't need to know what it is. that said, now that there's case law and precedent with the IR, it's getting easier (or at least less risky) to eschew to dreaded tax - I'll certainly be able to when I change contracts.
If you're Ltd Co. then you're a director and you'll be earning money selling goods, not at an hourly rate through an agent so you hav nothing at all to worry about w.r.t. IR35 as far as I can see.
(What is IR35??? where have you been? www.contractoruk.com/ir35-resources.shtml )
Errm.. actually if you don't know what it is, be thankful that you don't need to know what it is. that said, now that there's case law and precedent with the IR, it's getting easier (or at least less risky) to eschew to dreaded tax - I'll certainly be able to when I change contracts.
Ermmm, what they said
IR35 only affects you if you're working under contract for someone, at their place of bussiness, using their equipment etc
Basically to get more tax out of IT contractors, but I guess if they reckonned they could apply the rules to anyone, they would
You'll be OK though
IR35 only affects you if you're working under contract for someone, at their place of bussiness, using their equipment etc
Basically to get more tax out of IT contractors, but I guess if they reckonned they could apply the rules to anyone, they would
You'll be OK though
thanks guys, I hadnt kept up with IR35 since going permy, so wasnt sure on the latest tax laws. should have realised selling products isnt a wage scam!!
have already been in discussion with ted re:adverts so hopefully be able to 'spot' link clicks and offer discounts to PH.
Im about to start off a new thread in General asking what you would like to see, so drop an answer onto it..
have already been in discussion with ted re:adverts so hopefully be able to 'spot' link clicks and offer discounts to PH.
Im about to start off a new thread in General asking what you would like to see, so drop an answer onto it..
As has already been pointed out, operating your business as a Ltd company means that the company pays Corporation Tax on its own trading profits. You, as a director, will be liable for Income Tax and National Insurance Contributions (just like any employee) on any salary paid to you out of the company. This tax and NI is normally administered by the company (as your employer) through the PAYE system. This means, of course, that the company has to register for PAYE quite early on in its life. As a Director, you will also be expected to complete your own personal Self Assessment tax return form each year.
No doubt, you would also be a shareholder of the company. As a shareholder, you can draw money from the company in the form of dividends. These can be a very "tax" effective form of payment chiefly because dividends are not liable to National Insurance. Most Director/Shareholders pay themselves through a combination of dividends and salary in any given tax/financial trading year.
IR35 regulations do not apply to normal "trading" companies. They only apply to companies (and partnerships too) where the company/partnership has entered into a contractual relationship with an "employer" and the terms of the contract indicate that the relationship is of an Employer/Employee nature.
Apart from tax, limited companies and their directors have legal obligations under the Companies Act to file accounts and an Annual Return with Companies House each year. Other Company Secretarial matters sometimes have to be dealt with from time to time.
Under current tax rules, it is probably marginally more tax effective to operate through a company rather than as a sole trader. However, you never know what Gordon might have up his sleeve for the next budget.
There are lots of hidden "traps" lying around for directors in company law and company tax legislation. I've seen many small companies come unstuck because directors were not aware of these potential time bombs. Best advice is to talk to an accountant very early on, even before the company has been set up if possible.
No doubt, you would also be a shareholder of the company. As a shareholder, you can draw money from the company in the form of dividends. These can be a very "tax" effective form of payment chiefly because dividends are not liable to National Insurance. Most Director/Shareholders pay themselves through a combination of dividends and salary in any given tax/financial trading year.
IR35 regulations do not apply to normal "trading" companies. They only apply to companies (and partnerships too) where the company/partnership has entered into a contractual relationship with an "employer" and the terms of the contract indicate that the relationship is of an Employer/Employee nature.
Apart from tax, limited companies and their directors have legal obligations under the Companies Act to file accounts and an Annual Return with Companies House each year. Other Company Secretarial matters sometimes have to be dealt with from time to time.
Under current tax rules, it is probably marginally more tax effective to operate through a company rather than as a sole trader. However, you never know what Gordon might have up his sleeve for the next budget.
There are lots of hidden "traps" lying around for directors in company law and company tax legislation. I've seen many small companies come unstuck because directors were not aware of these potential time bombs. Best advice is to talk to an accountant very early on, even before the company has been set up if possible.
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