Hi,
I've been spending the weekend researching and reading many posts here and elsewhere. My eyes are literally red.
I might have got myself into a bit of a pickle.
I got my first contract in Oct'15, agency told me to set-up a ltd co which I duly did. Only to be told a few weeks done the line, sorry client no longer wants you. I frantically applied for contracts and even permie jobs for the next few months and nothing.
I finally managed to get a break and get a 3 month contract in Jun'16 and concentrated all my efforts in working hard, client gave me a 3 month extension, long story short, I'm still here, though client has been trying to terminate contract for best part of last year and replace with permie staff.
I neglected the ltd co, I didn't take any money out of it other than expenses - mileage, accommodation (I was contracting away during the week), meals etc
Time flew by, and realised ltd company accounts needed to be done for July'17 - found an accountant and submitted this and paid the Corp Tax on time.
The fee the accountant charged said he would do the Corp Accounts & PAYE.
He has only done Corp Accounts and hasn't done PAYE as he said it was too late.
In the accounts he has put down a salary of £8k - as it was too late for any PAYE for the Corp Accounts.
My question is do I need to register for SA:
- I'm assuming for year ending April'16 - I didn't have a contract so had nothing to put in the SA for Jan'17?
- For year ending April'17 - My Corp Accounts (Oct'15-Oct'16) show £8k salary which is below any threshold for NI - so no personal tax to pay - in which case do I need to fill in SA?
- I'm thinking if I notified HMRC for SA now - they'll hit me with £100 penalty - by the time I get the UTR and activation code and fill in the SA (it will be way past 31/1/18) for £8k salary which has no tax to pay?
I do have a wife for my sins who doesn't work, did the accountant miss a trick and should have put my wife on the salary for £8k (she does do a lot to help me out business wise - much like a PA) - I think the accountant reason for this it may attract unnecessary attention. She doesn't have any shares in the company - but this can be easily arranged if it helps.
Reading around, it seems £8k salary (vs £11k) is the preferred option as it means you save yourself the headache of setting up PAYE. Is £8k salary acceptable by HMRC or is it frowned upon as my accountant seemed to suggest?
With the £8k salary - is it a simple case of simply transferring this amount from business to personal bank account and just making a note in the records recording it as Salary?
Various posts have suggested £8k salary still gives you state pension - how does this work? - do you have to notify anyone? - I imagine with PAYE - the PAYE process ensures you are entitle to the state pension.
From what I understand, I could also declare a dividend - £5k dividend allowance tax-free plus a further £3k dividend to use the remainder of my personal allowance which will also be tax free (i.e. not attract the 7.5% dividend tax rate). In total £16k transfer from my business to personal account - tax free? and thus no need to fill in SA?
Currently I have one share, I could give my wife one share too - would she then also be able to get the same dividends as above i.e. £8k salary + £3k dividend to take upto personal allowance + £5k dividend allowance. We would have £32k combined tax free? which is more than enough for us to live on.
At the moment, I don't really trust my accountant he just seems interested in making more money from me. I'd like to get some other opinions as my head is currently spinning from reading and reading.
I so want to get a handle on this and get it into some sort of routine, so I can concentrate on my contracting.
Any helpful advice will be so much appreciated.
Apologies for the long post - but I'm in really confused place right now.
Thank so much for taking the time to read.
I've been spending the weekend researching and reading many posts here and elsewhere. My eyes are literally red.
I might have got myself into a bit of a pickle.
I got my first contract in Oct'15, agency told me to set-up a ltd co which I duly did. Only to be told a few weeks done the line, sorry client no longer wants you. I frantically applied for contracts and even permie jobs for the next few months and nothing.
I finally managed to get a break and get a 3 month contract in Jun'16 and concentrated all my efforts in working hard, client gave me a 3 month extension, long story short, I'm still here, though client has been trying to terminate contract for best part of last year and replace with permie staff.
I neglected the ltd co, I didn't take any money out of it other than expenses - mileage, accommodation (I was contracting away during the week), meals etc
Time flew by, and realised ltd company accounts needed to be done for July'17 - found an accountant and submitted this and paid the Corp Tax on time.
The fee the accountant charged said he would do the Corp Accounts & PAYE.
He has only done Corp Accounts and hasn't done PAYE as he said it was too late.
In the accounts he has put down a salary of £8k - as it was too late for any PAYE for the Corp Accounts.
My question is do I need to register for SA:
- I'm assuming for year ending April'16 - I didn't have a contract so had nothing to put in the SA for Jan'17?
- For year ending April'17 - My Corp Accounts (Oct'15-Oct'16) show £8k salary which is below any threshold for NI - so no personal tax to pay - in which case do I need to fill in SA?
- I'm thinking if I notified HMRC for SA now - they'll hit me with £100 penalty - by the time I get the UTR and activation code and fill in the SA (it will be way past 31/1/18) for £8k salary which has no tax to pay?
I do have a wife for my sins who doesn't work, did the accountant miss a trick and should have put my wife on the salary for £8k (she does do a lot to help me out business wise - much like a PA) - I think the accountant reason for this it may attract unnecessary attention. She doesn't have any shares in the company - but this can be easily arranged if it helps.
Reading around, it seems £8k salary (vs £11k) is the preferred option as it means you save yourself the headache of setting up PAYE. Is £8k salary acceptable by HMRC or is it frowned upon as my accountant seemed to suggest?
With the £8k salary - is it a simple case of simply transferring this amount from business to personal bank account and just making a note in the records recording it as Salary?
Various posts have suggested £8k salary still gives you state pension - how does this work? - do you have to notify anyone? - I imagine with PAYE - the PAYE process ensures you are entitle to the state pension.
From what I understand, I could also declare a dividend - £5k dividend allowance tax-free plus a further £3k dividend to use the remainder of my personal allowance which will also be tax free (i.e. not attract the 7.5% dividend tax rate). In total £16k transfer from my business to personal account - tax free? and thus no need to fill in SA?
Currently I have one share, I could give my wife one share too - would she then also be able to get the same dividends as above i.e. £8k salary + £3k dividend to take upto personal allowance + £5k dividend allowance. We would have £32k combined tax free? which is more than enough for us to live on.
At the moment, I don't really trust my accountant he just seems interested in making more money from me. I'd like to get some other opinions as my head is currently spinning from reading and reading.
I so want to get a handle on this and get it into some sort of routine, so I can concentrate on my contracting.
Any helpful advice will be so much appreciated.
Apologies for the long post - but I'm in really confused place right now.
Thank so much for taking the time to read.
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