Ltd Vs Umbrella take home monies

[Blakes03]

PerfectStorm – Thank you for the information and advice.

I understand that I have elected to be paid 8064 instead of 10600 as this mitigates paying NI both as an employee and employer.

[mudskipper]

OMG - Cojak, you are right I don’t understand it as this chap is convinced it is all above board and therefore I too was convinced hence asking the question. You and the FAQQer have clearly told me that this is not possible - thank you.

Also – I do not know the name of the company, I shall not pursue the query any further.

Re travel - subject to the 2 year rule you can claim your travel expenses before tax. Sounds like you've got a lot of reading to do --->

[Blakes03]

Thank you Mudskipper - agreed :-)

[PerfectStorm]

PerfectStorm – Thank you for the information and advice.

I understand that I have elected to be paid 8064 instead of 10600 as this mitigates paying NI both as an employee and employer.

There is a 2000 pa employers allowance which cancels out most of the NI payment and leaves you better off at the end of the year. Paying a tiny bit of NI leaves you better off.

Oh and all scheme salesmen say they're above board. They are - for them. It's you that HMRC come after.

[Blakes03]

Thank you PerfectStorm, not heard about this before but I shall look into it :-)

[Contreras]

£2,383 dividends is bang on the mark for efficient use of the basic rate band: 31785 * 0.9 / 12.

£672 salary is bang on the mark for the NI primary threshold, thus avoiding NI completely: 8060 / 12.

Problem is these two in combination are typically not the most 'tax efficient' and there is margin to improve.

I would:

- chase the current accountant and quickly sack them if you're not happy. In the first year of trading it should be straightforward for the new accountant to re-work the figures from zero.

- adjust the salary/dividend split, accounting for other income, charities, pension, etc. No rush, but needs to be sorted before the tax/company year ends.

- consider and understand what tax-free expenses are due. Again, no rush to pay these but keep proper records, e.g. mileage log and receipts where applicable.

- don't allow envy of someone 'splashing the cash' to cloud your judgement. This is equally foolish as letting the tax tail wag the dog.

[PerfectStorm]

Indeed. Especially be wary of anything purchased on credit.

[Alan @ BroomeAffinity]

If you have a "private income" then the amount you can take out without paying higher rate tax is reduced. You'll need to factor this in. What tax planning discussions did you have with your accountant? Did he explain/explore how to get to this money in your company tax efficiently? Eg, as capital, claiming ER. What about pensions and life insurance? Have you looked at this?

[Blakes03]

Contreras – Thanks for confirming my figures and yes, agreed, at the moment I am very much letting the tax tail wag the company dog as this is a novelty after paying top rate tax for years. I more than likely will calm down on this front after a year, but as it is I am in a fortunate position that I do not need a high income at the moment.

PerfectStorm, again thank you for the advice but am not sure what you mean by be wary of anything purchased on credit? I have never used credit to buy anything except houses. Can you please paste in a link for this £2000 allowance for company NI contributions, I would be interest in that maybe.

Alan – I am not able to get around the 40% at the time of self-assessment but at least I am not paying for it from working. By my sums I will only have £2,537 at 20% which is better than nothing, maybe pay for a holiday. I do need to look into the Pension idea to get money out at some point. I have not had time to meet up with my accountant this year who I have used for years and is an old university friend. He moved up to Cheshire a few years ago and therefore not easy to catch up with him BUT on the plus side, when I do go up I shall be claiming mileage and a hotel to have a good night out and catch up ;-)

[mudskipper]

Can you please paste in a link for this £2000 allowance for company NI contributions, I would be interest in that maybe.

Why don't you take that phrase and paste it into google? It's amazing what computers can do these days.