Ltd Vs Umbrella take home monies

[GregK]

Can you please explain me regarding Ltd company: how much can I take out of Ltd without going to higher tax band per year? Thanks.

[Alan @ BroomeAffinity]

Can you please explain me regarding Ltd company: how much can I take out of Ltd without going to higher tax band per year? Thanks.

Assuming no other income and that you are the only shareholder, £42,385, gross.

[unixman]

Contrary to popular belief (especially among permies), running a ltd company doesn't offer any big *income tax* advantages. It does, however, allow you to pay less national insurance. Against that you have the expense of hiring an accountant (circa 2k annually) and the fact that your earnings tend to remain locked in the company.

Just how much NI you save is hard to know, because NI is so blisteringly complicated.

[PerfectStorm]

Contrary to popular belief (especially among permies), running a ltd company doesn't offer any big *income tax* advantages. It does, however, allow you to pay less national insurance. Against that you have the expense of hiring an accountant (circa 2k annually) and the fact that your earnings tend to remain locked in the company.

Just how much NI you save is hard to know, because NI is so blisteringly complicated.

Not only that, the fact that you're a limited company means there's more money incoming in the first place (no holiday, benefits, redundancy etc to worry about on the client/employer side)

[CloudWalker]

Assuming no other income and that you are the only shareholder, £42,385, gross.

This is why some people who earn more, put the Wife on the payroll for doing sweet FA....

[Alan @ BroomeAffinity]

This is why some people who earn more, put the Wife on the payroll for doing sweet FA....

Which isn't legal. Setting it up properly with your wife as a shareholder is another matter.

[Snarf]

Which isn't legal. Setting it up properly with your wife as a shareholder is another matter.

I'm interested, I have recently set my wife up as an employee as she only works part time and had a few £k of her personal allowance available, now I know that if that was the end of it we would be in a bit of a dodgy situation as Id be paying her to do nothing... what exactly is the criteria for her being a legit employee?

She is "Doing office duties" ie sorting my recipients, replying to emails that come in while I'm unavailable, sending out invoices etc..

My concern now is that I didnt work out how long she spends doing this and her salary isn't based on that, its just a flat £210 a month, regardless of how much work she actually needs to.


Finally to the original poster, you mentioned that your accountant takes ages to reply to your emails.... get a new accountant.

[SueEllen]

If she is a "proper" employee she needs to earn at least minimum wage so has to be doing just over 32 hours of work for you a month.

If she is a company officer e.g. company secretary then it doesn't matter how much she earns for the work she does.

[Alan @ BroomeAffinity]

I'm interested, I have recently set my wife up as an employee as she only works part time and had a few £k of her personal allowance available, now I know that if that was the end of it we would be in a bit of a dodgy situation as Id be paying her to do nothing... what exactly is the criteria for her being a legit employee?

She is "Doing office duties" ie sorting my recipients, replying to emails that come in while I'm unavailable, sending out invoices etc..

My concern now is that I didnt work out how long she spends doing this and her salary isn't based on that, its just a flat £210 a month, regardless of how much work she actually needs to.


Finally to the original poster, you mentioned that your accountant takes ages to reply to your emails.... get a new accountant.

For me, the simple test is this: would you pay this amount of money for that amount of work to someone other than your wife? If you can honestly say yes, and it fits in with NMW legislation, then do it. If not, don't.

[northernladuk]

For me, the simple test is this: would you pay this amount of money for that amount of work to someone other than your wife? If you can honestly say yes, and it fits in with NMW legislation, then do it. If not, don't.

Fairest test I've seen so far. +1 from me.