Choices for non-dodgers.

[MrsGoof]

OK, lower fees I suppose, balanced by more paperwork to do.
No divis, that was my point.
What do you mean by "money left over from 5%"?
Flat rate scheme, good point: if HMRC reckon it's good for me and good for them, I have no opoosition to that.

if opperating under IR35 then you are allowed to use 5% of your incomne t pay bills accountatn etc..
so £50,000 income, gove you £2,500 to spend on stuff. If the only expense you have is accountant at £50pm that gives £2500 - £600 = £1900 you can pay a divi with.

No with Flat Rate VAT you chage £8,750 of VAT of which you pay £7630to HRMC and the remainde £1,120 is yours

so £1,120 (CREAMED OFF FROM vat) + £1,900 (left over from 5% allowance) = £3,020 left in your company bank account that you can pay dividends from.

Paper Work FFS I do most of my stuff myself and its 30 minutes a month, If an accountat does everthing then its 10minutes a month.

[malvolio]

if opperating under IR35 then you are allowed to use 5% of your incomne t pay bills accountatn etc..
so £50,000 income, gove you £2,500 to spend on stuff. If the only expense you have is accountant at £50pm that gives £2500 - £600 = £1900 you can pay a divi with.

No with Flat Rate VAT you chage £8,750 of VAT of which you pay £7630to HRMC and the remainde £1,120 is yours

so £1,120 (CREAMED OFF FROM vat) + £1,900 (left over from 5% allowance) = £3,020 left in your company bank account that you can pay dividends from.

Paper Work FFS I do most of my stuff myself and its 30 minutes a month, If an accountat does everthing then its 10minutes a month.

It's quite clear why as well - if you think you can be under IR35 and pay divis, I'm afraid you are badly wrong in your assumptions. If you are IR35 caught, you pay PAYE and NICs on all your gross less the 5%, so dividends are not an option.

I think you need to talk to an accountant before HMRC catches up with your rather inventive ideas of book-keeping. Right now you appear to commiting tax evasion...

[oraclesmith]

Yep, except as well as the 5% you can also allow some types of expenses, pension contribs etc. See here .....

http://www.hmrc.gov.uk/ir35/ir35.xlt

Or maybe .....

https://www.taxevasionhotline.co.uk/ !!!!

[expat]

Depends on you attitude to pensions. Better regime generally if your co.

I must admit to being slightly curious as to why you feel the apparent need to pay tha maximum possible to the IR. Still if that's what floats your boat....

BTW, the IR do actually accept donations. Some people give them...

Not me!

But I do understand what a dividend is for, it's the reward to investors for risking their capital, and it comes from the profit, the making of which was only enabled by their capital. The principle is central to Capitalism.

I don't pay dividends because I haven't invested capital to earn them. If you like, not because I believe in giving the maximum possible to the IR, but because I believe in capitalism.

[oraclesmith]

Not me!

But I do understand what a dividend is for, it's the reward to investors for risking their capital, and it comes from the profit, the making of which was only enabled by their capital. The principle is central to Capitalism.

I don't pay dividends because I haven't invested capital to earn them. If you like, not because I believe in giving the maximum possible to the IR, but because I believe in capitalism.

You probably have risked capital but don't consider it enough to warrant giving yourself a regular dividend. For example, if you went into business with, say, Bill Gates at the very beginning of Microsoft or whatever, you might have got yourself a tiny share of the company for next to no money. Years later it's worth millions, even though you personally hadn't felt any great risk or contributed much to the company.

Also, your company would still be worth something to a potential shareholder, especially if you sold them a controlling influence. Hence the problem with share allotment once you're up and running.

In Karl Marx's theory, your efforts for your company are called variable capital - in that it is possible for human labour to vary the output of the system. As you are a professional and not 'labour' as such, this theory of capitalism fits your circumstances well since the volume and quality of your outputs will vary considerably depending on human factors such as motivation - contrary to the classic definition which sets labour aside from capital. So now you can pay yourself a divi !

[expat]

...So now you can pay yourself a divi !

Nice one!

But I cleave to Adam Smith rather than Karl Marx. There are 3 main ways of making money: rent, profit, and wages. Dividends are (a share of) profit, what I take from contracting is wages.

[ratewhore]

I don't see why you need to ask the question as you are obviously a principled man. I think you would be better off using those principles to make your decision rather than get the likes of us to try and convince you otherwise...

[expat]

I don't see why you need to ask the question as you are obviously a principled man. I think you would be better off using those principles to make your decision rather than get the likes of us to try and convince you otherwise...

I'm not asking to be convinced of anything, I'm just wondering if the only significant reason for working through your own Ltd Co is to avoid NICs on part of your income.

[MrsGoof]

It's quite clear why as well - if you think you can be under IR35 and pay divis, I'm afraid you are badly wrong in your assumptions. If you are IR35 caught, you pay PAYE and NICs on all your gross less the 5%, so dividends are not an option.

so what (In Your Opinion) happens to any money left over from the 5%?

[expat]

so what (In Your Opinion) happens to any money left over from the 5%?

In my opinion (admittedly not Malvolio's) "the 5%" is a limit, not an allowance. So if the expenses that are allowed up to that limit do not reach the limit, what happens to the limit is that it is not reached. That is all.