Interest free loan/credit options to cover costs before Entrepreneur's Relief

[sop]

Hi all,

I've recently accepted a 12 month contract which will more than likely end in a permanent position afterwards. This is my first contract.

I've researched the tax rules and I'm aware I'm best off staying beneath the £43k limit this year through low salary/dividends and then dissolving the company in order to receive entrepreneur's relief, which my accountant has advised me I will qualify for.

However, I've recently purchased a property and I'm looking to invest around £10-12k in furnishing and refurbishing it. This, with my high living costs (London), will obviously tip me over the balance into the highest tax bracket which I'm keen to avoid.

My question is thus if anyone is aware of a manner in which I can get an interest free loan/credit to cover these costs for the year until I can pay it back after entrepreneur's relief?

I have applied for a 27 month interest free credit card (post office) but they're currently only willing to lend me 1k - despite myself having good credit - though I do plan on challenging this.

Any other ideas?

Thanks

[morf]

A directors loan is what you may want, speak to accountant first...

[northernladuk]

You'll be inside IR35 if it's a temp to perm position so your dividend option is gone for a start. You are going to have to account for being I side IR35 differently.

Speak to your accountant though. Buggering about so early with no warchest when nothing is guaranteed in contracting is asking for trouble.

[Maslins]

I'm baffled at you making plans for entrepreneurs relief on closing when you're literally just starting your first contract?

Planning ahead is of course often a good thing...but I personally feel you're taking it a little far, as so much can happen in the meantime.

[northernladuk]

It's just another case of a little knowledge being a dangerous thing I'm afraid. We've got two other questions running currently where newbies are trying to be smart and failing and I've a feeling they wont be the last before Apr 16th. If this is what we get just imagine the droves that didn't ask and went ahead anyway. It's little wonder HMRC are circling contractors like vultures.

[sop]

Thanks for all the replies guys.

With regards to the contract, the company I'm contracting for were really keen to get me onboard as I came highly recommended, so after some negotiations, they agreed to take me on as a contractor on a good day rate.

There's no guarantee that I will go permanent at the end; they may extend the contract, they make take us permanent (which they have expressed an interest in doing), or they may just simply end the contract. I was merely planning for what appears to be the most likely eventuality, though I'm fully aware the situation might change.

I will seek clarification from my accountant though.

Cheers

[northernladuk]

If they've expressed an interest then there is a position so my IR35 comment stands. Your accountant does accounts. Speak to a contract specialist like QDOS or similar.

[WordIsBond]

Your accountant does accounts. Speak to a contract specialist like QDOS or similar.

I would agree.

If they've expressed an interest then there is a position so my IR35 comment stands.

I would not agree.

There MIGHT be a position. There is a difference between, on the one hand, perm to contract and on the other, contract to perm, when the future perm position is in doubt during the contract.

The IR35 status depends on the working conditions, SDC, MOO, ROS, not whether or not there's a possibility of a perm position opening up in the future.

[northernladuk]

I would agree.

I would not agree.

There MIGHT be a position. There is a difference between, on the one hand, perm to contract and on the other, contract to perm, when the future perm position is in doubt during the contract.

The IR35 status depends on the working conditions, SDC, MOO, ROS, not whether or not there's a possibility of a perm position opening up in the future.

But if the client is just using this as a temp to perm opportunity then RoS won't exist and he's likely to have a problem with the other two. The working practices and attitude of the client will be geared to a temp or an employee in a trial period so odds will be stacked up against him.

You are right to question. I was attempting to use a sledgehammer approach as the OP had made absolutely no reference to IR35 leading me to believe he hasn't a clue what it is or doesn't care. Was more an attempt to get some action out of him than discuss the finer points.

[WordIsBond]

You are right to question. I was attempting to use a sledgehammer approach as the OP had made absolutely no reference to IR35 leading me to believe he hasn't a clue what it is or doesn't care. Was more an attempt to get some action out of him than discuss the finer points.

Fair enough. Sledgehammers can be quite effective, especially in an IT context.