Can i have my own company while i am paying 40% tax?

[Steve Dyson]

I am in full time job and i get my salary after 40% tax reduction.

I am planning to do some consultancy work outside my working hours. Rates are really good and the contract is outside IR35.

I am happy to pay 40% tax on this new contract at the end of the year when i will do my tax return but i was wondering if i can have my own registered company for the contract work while i am in full time employment? As this contract is outside IR35 so i might be able to save some money?

[Wilmslowboy]

Yes, no issue at all.

However once you pay accountant fees, insurance, the fact you have no tax allowance left to take advantage of, it may not be that beneficial .

[Steve Dyson]

Wilmslowboy said:

Yes, no issue at all.

However once you pay accountant fees, insurance, the fact you have no tax allowance left to take advantage of, it may not be that beneficial .

would i still have to declare this income in my tax return if doing it through a registered company?

I do my tax return because i had to return my child benefits last year.

[edc]

You should also check for any restrictions on other work in your employment contract.

[lost in espace]

If you are paying 40% tax look into using a limited co, and an accountant!

[Mr Pointy]

Do the company you are going to be contracting for care if you work as a Sole Trader or do they require you to work as a limited company (a Personal Service Company)?

It would be most advisable for you to find an accountant to help you in setting up; you'll almost certainly save the cost (& it's a deductible expense).

[Wilmslowboy]

Steve Dyson said:

would i still have to declare this income in my tax return if doing it through a registered company?

I do my tax return because i had to return my child benefits last year.

Yes.

[Steve Dyson]

Mr Pointy said:

Do the company you are going to be contracting for care if you work as a Sole Trader or do they require you to work as a limited company (a Personal Service Company)?

It would be most advisable for you to find an accountant to help you in setting up; you'll almost certainly save the cost (& it's a deductible expense).

No, company doesn't care.

[98elise]

Consider putting all the contracting money into a pension (as a company contribution). Saves the 40% tax.

[super7]

Your Ltd company is a totally separate entity to you and your taxable income.

You can accumulate as much money as you like in the Ltd company and only pay corporation tax on it after expenses. The only time you will be exposed to a personal tax liability is if you take a salary from it, or a dividend. You can just keep accumulating cash in it.

Depending on your needs, you can avoid any 40% tax on it, by not taking it. Or you can make a family member a shareholder and they can take dividend etc. Speak to an accountant, but it's all down to how much you need the money from your bit-on-the-side

[Steve Dyson]

super7 said:

Your Ltd company is a totally separate entity to you and your taxable income.

You can accumulate as much money as you like in the Ltd company and only pay corporation tax on it after expenses. The only time you will be exposed to a personal tax liability is if you take a salary from it, or a dividend. You can just keep accumulating cash in it.

Depending on your needs, you can avoid any 40% tax on it, by not taking it. Or you can make a family member a shareholder and they can take dividend etc. Speak to an accountant, but it's all down to how much you need the money from your bit-on-the-side

Thanks, i will look into this. At the moment i am searching for a good accountant

I can leave that money in the company, i won't need it in near future.

I have been doing my tax return from last 2 years because i had to return the child benefits as i was earning more than the threshold level. Do i need to declare that extra ltd company income in my tax return ?

[acd80]

Steve Dyson said:

I am in full time job and i get my salary after 40% tax reduction.

I am planning to do some consultancy work outside my working hours. Rates are really good and the contract is outside IR35.

I am happy to pay 40% tax on this new contract at the end of the year when i will do my tax return but i was wondering if i can have my own registered company for the contract work while i am in full time employment? As this contract is outside IR35 so i might be able to save some money?

I was in an identical position a few years ago. Set up a Ltd company and used a contractor accountant. If you are contracting on the side, no self-respecting company will touch you unless you're a Limited company with a suitable level of professional liability insurance. Apart from that, no issues whatsoever. You'll only be able to take £2,000 out of the business as a tax free dividend however.

[Mr Pointy]

Steve Dyson said:

Thanks, i will look into this. At the moment i am searching for a good accountant

I can leave that money in the company, i won't need it in near future.

I have been doing my tax return from last 2 years because i had to return the child benefits as i was earning more than the threshold level. Do i need to declare that extra ltd company income in my tax return?

Try this site which has a lot of information & an extensive forum:
https://www.contractoruk.com/

There are guides covering many subjects & a number of links to accountants. You really need to talk over the best way to operate & the implications of a PSC as opposed to being a ST. It depends on several factors such as how much you expect to be making a year & what you want to do with the money (pensions can be very tax efficient). An acountant can also advise on allowable expenses (you do need a new laptop & printer don't you?) & potential issues such as VAT & insurance.