Private Sector and IR35 -Grrrrr

[northernladuk]

Thank you for this - felling like I'm slowly going mad. I'll read the link in detail.

I was told that we wouldn't need to use the deemed payment calculator as we're paying all taxes each month via PAYE? Not sure how I can account for the 5% it gives though.

Use another term for Inside IR35. Call it disguised employment. He's effictively employed. You can't split a wage.

[gables]

Thank you for this - felling like I'm slowly going mad. I'll read the link in detail.

I was told that we wouldn't need to use the deemed payment calculator as we're paying all taxes each month via PAYE? Not sure how I can account for the 5% it gives though.

well, base the PAYE on just 95% of the monthly income. That'll leave enough at the end of the year to pay an accountant etc.

[Jenme]

The person is being taxed as an employee (singular). If you split it you are gaining an unfair tax advantage using both your lower rates when her husband is doing a job like an employee.

That's the crux of it, isn't it. We would be getting a tax advantage so he can't employ me. If he was paying an accountant, he would be able to offset the fee as an expense instead - you're right, I can't be an employee (which is fortunately how I have run the payroll this month).

I presume then he won't be able to utilise the employment tax allowance then, hence the 14% disadvantage advised on the earlier link.

[northernladuk]

That's the crux of it, isn't it. We would be getting a tax advantage so he can't employ me. If he was paying an accountant, he would be able to offset the fee as an expense instead - you're right, I can't be an employee (which is fortunately how I have run the payroll this month).

I presume then he won't be able to utilise the employment tax allowance then, hence the 14% disadvantage advised on the earlier link.

But he can employ you if he wants to.

Get yourself an accountant.

[TheCyclingProgrammer]

There's a lot of muddled language being used in this thread.

If you're both shareholders you can split any profits the company makes by paying dividends. But if all of the money the company is earning is coming from your husband in an IR35 contract, then there isn't actually any profits for you to split as it is all paid to him as salary (subject to the 5% expenses allowance).

None of this affects whether or not you can be paid a salary by the company for whatever role you're doing, but if the company has no additional income coming in besides the IR35 contract, then it can't actually *afford* to pay you. The money just isn't there.

The best advice I can give is for your husband to start looking for an outside IR35 contract. This will allow him to pay himself more flexibly, build up a warchest, share the profits with you when you have accumulated some, and the company will have sufficient cashflow to pay you a reasonable salary as well.

[Lance]

It would be seen as tax avoidance in this case

It isn't helped when HMRC say you can't do tax avoidance. You can. You cannot do tax evasion because that's illegal.

Tax avoidance is legal and legitimate.

Get an accountant. Read the thread here on accountant recommendations.

[northernladyuk]

OP what does your OH do? Few people are really inside IR35.

[Jenme]

OP what does your OH do? Few people are really inside IR35.

He's an IT consultant in the private sector - he had to sign a form to say he was inside IR35.

[northernladyuk]

He's an IT consultant in the private sector - he had to sign a form to say he was inside IR35.

What kind of IT? Project based?

Admittedly having to sign that form is problematic... Is this commonplace nowadays?

[northernladuk]

Is he through an agent? Have they offered him PAYE or an umbrella option?