+ Reply to Thread
Posts 1 to 7 of 7
  1. #1

    Nervous Newbie


    Join Date
    Nov 2013
    Posts
    2
    Thanks (Given)
    0
    Thanks (Received)
    0
    Likes (Given)
    0
    Likes (Received)
    0

    Question Ltd Company already running but now entering full-time job...Puzzled

    Hi all,

    I was wondering if I could get some advice on a situation I don't fully understand. My Ltd company is up and running, already in existence etc. However, I have just accepted a PAYE full-time job, and am unclear about what to do regarding my company. I do have an accountant on-side, but before I approach them I wouldn't mind having a bit of advice in advance, if poss, just so I can get the picture clear in my head.

    Do I, for instance, have to park the company, make it dormant? Or can I keep it going, but stop paying myself a salary from it, and switch to dividends, or what?
    My current situation is that I pay myself a monthly salary from my own company, and that's it, so I've registered myself as a PAYE employee with my own company. Presumably I now have to lay myself off in order to become PAYE registered with my new employer?

    As you can see, I'm baffled, and desperately seeking some kind of clarity to steer me towards the best and legally correct course of action.

    Best wishes,
    Paul

  2. #2

    Lord of the Vectras

    VectraMan's Avatar
    Join Date
    Dec 2005
    Location
    European Union (UK region)
    Posts
    10,885
    Thanks (Given)
    53
    Thanks (Received)
    173
    Likes (Given)
    273
    Likes (Received)
    1026

    Default

    I've kept my company going in the couple of years I've been a permie, and thanks to some plan B work pay the occasional dividend. So there's no problem with that, although you will still have to do annual accounts if your company is still trading. A dormant company has to be not trading, but I think you still need to do an annual return and pay the fee - not sure. Most people would just close the company; keeping a dormant company doesn't make a lot of sense unless you're particularly attached to the name and want to use it again in future.

    As for PAYE, your accountant will degresiter your company from PAYE and give you a P45 to give to your employer. So effectively you have "laid yourself off".
    Special Discretion Required.

  3. #3

    Nervous Newbie


    Join Date
    Nov 2013
    Posts
    2
    Thanks (Given)
    0
    Thanks (Received)
    0
    Likes (Given)
    0
    Likes (Received)
    0

    Default Many thanks...

    Hi there Vectra
    Many thanks for your helpful advice. A really valuable overview of my options.

    Best wishes,
    Paul

    Quote Originally Posted by VectraMan View Post
    I've kept my company going in the couple of years I've been a permie, and thanks to some plan B work pay the occasional dividend. So there's no problem with that, although you will still have to do annual accounts if your company is still trading. A dormant company has to be not trading, but I think you still need to do an annual return and pay the fee - not sure. Most people would just close the company; keeping a dormant company doesn't make a lot of sense unless you're particularly attached to the name and want to use it again in future.

    As for PAYE, your accountant will degresiter your company from PAYE and give you a P45 to give to your employer. So effectively you have "laid yourself off".

  4. #4
    ASB
    ASB is offline

    Godlike


    Join Date
    Jul 2005
    Location
    Somerset
    Posts
    5,377
    Thanks (Given)
    44
    Thanks (Received)
    82
    Likes (Given)
    533
    Likes (Received)
    194

    Default

    If you do keep the company make sure to tell hmrc that your new job is noted as your main employment. It wont make any difference to the amount of ta you pay in the end but may prevent you overpaying and then reckaiming through satr. All depends on what both jobs ard paying.

  5. #5

    My post count is Majestic

    northernladuk's Avatar
    Join Date
    Mar 2009
    Posts
    30,860
    Thanks (Given)
    119
    Thanks (Received)
    983
    Likes (Given)
    1510
    Likes (Received)
    5006

    Default

    And speak to your accountant about what to do while the company is sitting there quietly. There are still things you have to do even if it isn't trading but probably won't need an accountant to do them, unless he is going to give a you much reduced rate to babysit it for awhile.
    'CUK forum personality of 2011' - Winner - Yes really!!!!

  6. #6

    Super poster


    Join Date
    Feb 2010
    Location
    London, UK
    Posts
    3,996
    Thanks (Given)
    36
    Thanks (Received)
    29
    Likes (Given)
    153
    Likes (Received)
    88

    Default

    Quote Originally Posted by cprelude View Post
    As you can see, I'm baffled, and desperately seeking some kind of clarity to steer me towards the best and legally correct course of action.
    Tell your accountant "I am going to stop drawing a salary payment and need a P45 issued as I am taking a permie job on a salary". You would then present the P45 to your new employer.

    You can then keep the company running without drawing a salary or close it down (which takes a few months). If you won't be needing the company then I would be inclined to wait until the end of the company year and ask the accountant to produce the end of year accounts and close the company for you.

    If you have profit retained in the company then you can draw this as a dividend. If the amount is > about 25k then ask about closing the company with a Members Voluntary Liquidation (do a search for that on this forum) whereby you close the company and take the cash as a "capital distribution" which attracts a lower tax rate than dividends or salary.

    Be aware that you will still need a self assessment for the current tax year and this may result in a tax bill so ask your accountant to check your new PAYE tax code for you when you start work.
    Free advice and opinions - refunds are available if you are not 100% satisfied.

  7. #7

    Contractor Among Contractors


    Join Date
    Sep 2012
    Posts
    1,091
    Thanks (Given)
    18
    Thanks (Received)
    92
    Likes (Given)
    55
    Likes (Received)
    118

    Default

    Theres been some good advice on here already.

    I would think about the next couple of years, are you likely to want the company again (eg if the PAYE gig just a contract under another name), and that, along side how much in the way of undistributed profit is in there, will probably educate whether you keep the company or not.

    Closing the company down would give you the possibility of access to a lower tax rate via a MVL or strike off on distribution of any retained funds in the company subject to qualifying period. You need to do the maths on that with your accountant.

+ Reply to Thread

Tags for this Thread

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts

Content Relevant URLs by vBSEO 3.6.0 ©2011, Crawlability, Inc.