Employer & Employee NI Contributions When Going Perm to Contract

[Coolshot]

Hi
I have recently moved from an Umbrella Co to Ltd Co. I've earned around £45k so far this year with the ubmrella, all PAYE. How should the deductions for employer & employee NI be handled now I'm a director? I pay myself a salary of £20k.

I've been reading this

http://www.hmrc.gov.uk/nitables/ca44.pdf

but its not 100% clear how much further NI I must pay this tax year.

[northernladuk]

Previous threads with questions about perm to contractor situations mid year can be found below

http://forums.contractoruk.com/accou...scal-year.html

http://forums.contractoruk.com/busin...-question.html

http://forums.contractoruk.com/busin...mployer-2.html

You need to read the guides to the right if your question is around how LTD's pay themselves. I am not sure if this is what you are asking as normally people have a clue how a system works before they set one up not after.

One of the most important parts of becoming a director is having an accountant who can help you through the pitfalls. There are plenty that post here or on the PCG site. He can help with most of the basic questions as well.

[Coolshot]

Previous threads with questions about perm to contractor situations mid year can be found below

http://forums.contractoruk.com/accou...scal-year.html

http://forums.contractoruk.com/busin...-question.html

http://forums.contractoruk.com/busin...mployer-2.html

You need to read the guides to the right if your question is around how LTD's pay themselves. I am not sure if this is what you are asking as normally people have a clue how a system works before they set one up not after.

One of the most important parts of becoming a director is having an accountant who can help you through the pitfalls. There are plenty that post here or on the PCG site. He can help with most of the basic questions as well.

Thanks. I do have an accountant & I have read the guides on here before setting up my company. I will check with them during office hours

[Waldorf]

First, why pay such a large salary? I take £7072 which is more tax efficient.

Directors pay nic on a cumulative basis, so until your salary has exceeded the nic free limit you will not pay nic.

I seem to recall that when I started there was some funny rule about starting part way through the tax year but ask your accountant.

[Coolshot]

I had read somewhere that a low salary/high dividend meant a higher chance of a tax investigation. But the consensus on here seems to be it doesn't make a difference so I may have to re think this. I've had the contract & working practices reviewed for IR35 & passed.

[northernladuk]

I had read somewhere that a low salary/high dividend meant a higher chance of a tax investigation. But the consensus on here seems to be it doesn't make a difference so I may have to re think this. I've had the contract & working practices reviewed for IR35 & passed.

You need to read the guides to the right if your question is around how LTD's pay themselves. I am not sure if this is what you are asking as normally people have a clue how a system works before they set one up not after.

HTH

[JoJoGabor]

I had read somewhere that a low salary/high dividend meant a higher chance of a tax investigation. But the consensus on here seems to be it doesn't make a difference so I may have to re think this. I've had the contract & working practices reviewed for IR35 & passed.

How did you get the working practices reviewed?

[Coolshot]

How did you get the working practices reviewed?

I used the services of Qdos Consulting.

[northernladuk]

I used the services of Qdos Consulting.

I think what JoJo is getting at you have the contract reviewed. You do not know what the working practices are until you hit site i.e. how they treat you on site. You could have a substitution clause in your contract but it is quite likely there is no way in hell they will honour it for example. Contract and working practices can be very different things.

Have you been on site and passed info on to QDOS?

[Coolshot]

I think what JoJo is getting at you have the contract reviewed. You do not know what the working practices are until you hit site i.e. how they treat you on site. You could have a substitution clause in your contract but it is quite likely there is no way in hell they will honour it for example. Contract and working practices can be very different things.

Have you been on site and passed info on to QDOS?

I have starting working at the client site. I had a fairly good idea of what the working practices would be before I started which was how I answered the questions in the review. However now that I'm here I do intend to check back over my responses & update QDOS.
I started with a question on NI, this feels like some sort of test!