ltd company inside IR35 help

[mushroom345]

I am working through an umbrella company but not particularly happy with them and would like to work through my ltd company instead. Main reason for working through umbrella is because I am caught inside IR35 and my agency won't write a contract to say otherwise.

My question is: if I work through my ltd company can I still deduct expenses before I work out tax and pay PAYE on it?

[xoggoth]

Allowable expenses certainly. Some vested interests will no doubt pop up with a load of bollox about advantages of umbrellas but in law there is not a damn thing an umbrella can deduct from the tax bill (leaving aside fiddle's EBT fiddles which I do not pretend to understand) that you cannot also deduct for your limited company. Subsistence expenses like travel & hotel bills, meals, cost of computers etc necessarily used, pensions, professional fees and so on.

Only advantage of umbrella is less hastle. You pay for that in your fees of course. And in any cockups they may make, making no mention of recent threads.

I suggest you check the IR's own website for the IR35 formula. It is fairly clear.

[Debbie Reinvented]

You also (small) benefit from the top 5% of turnover being exempt from IR35, but don't be misled into believeing that the 5% is tax free income to you or the company.

It's meant to cover IR35 non-allowable business expenses like accountants fees, annual return filing fee. If the additional business expenses are less than the 5% the company makes a small profit. If the profit is less than 10k it will be subject to corporation tax at 0% UNLESS you remove it as a dividend in which case it will be taxed at 19%

[partimer]

Some good explanations above.
One point I would add is that during inactive periods (remember the last 2-3 years of "slowdown") it can be expensive to have a Ltd. company.

Admittedly you won't be earning and hence zero profit and zero tax bill for your Ltd but you've still got to file all the paper work. Accountant will charge you regardless of you working. I believe some (not all) brollies take a cut of your earnings i.e. no work, no fee.

Still, I would go Ltd just because you might get an IR35 free contract in the future.

PS don't spend the tax and VAT money thinking it's yours. The number of people I see who go off and buy a plasma TV with the VAT they've collected and when the VATman comes calling 3 months later ... oh dear (tm)