Preventing double tax, vs Corp Tax

[BradMcA]

Your opinions please for the public sector contractors from April onwards..

Regarding this link: https://www.gov.uk/guidance/off-payr...vice-companies

I think you pay income tax etc on your day rate at source, which you then claim as a company expense to avoid being taxed twice, you pay corporation tax as usual on the remainder.

A colleague here thinks, you pay tax at source, but can then pull the whole lot out for yourself, with no corporation tax to pay.

What do you think?, are either of us right or neither!

[northernladuk]

But the message appears to be go brolly so you wouldn't be putting it through the Ltd surely?

[eek]

Your opinions please for the public sector contractors from April onwards..

Regarding this link: https://www.gov.uk/guidance/off-payr...vice-companies

I think you pay income tax etc on your day rate at source, which you then claim as a company expense to avoid being taxed twice, you pay corporation tax as usual on the remainder.

A colleague here thinks, you pay tax at source, but can then pull the whole lot out for yourself, with no corporation tax to pay.

What do you think?, are either of us right or neither!

You colleague is right. Your company will receive the income after tax (employee NI and income tax is withheld and paid by the agency on your company's behalf in the same way that the CIS schemes work) and the company should pay the received salary directly to your bank account.

Employers NI is not withheld but is paid by the agency directly. Chances are it will be deducted from your contract pay but that depends on the terms of the contract you signed.

An FAQ on the changes can be found at http://forums.contractoruk.com/publi...anged-faq.html and there is an entire forum of discussions at http://forums.contractoruk.com/public-sector-ir35/

[Fred Bloggs]

OK, so why run a Ltd Co then? Surely an unnecessary and expensive irrelevance if you are effectively a PAYE employee?

[BigRed]

OK, so why run a Ltd Co then? Surely an unnecessary and expensive irrelevance if you are effectively a PAYE employee?

Depends on how often you switch contracts. If you are permanently PS then cancel all your insurance and wind up the ltd, otherwise costs go through the roof.