PAYE Contractor as second job

[pscont]

Hi all,

My situation is:

Director of LTD
Also employee of LTD - contract, payslips, etc
Using tax code 1250L

There is a possibility to start a new 4 months contract as a PAYE contractor. It seems they name it like this because although it is inside IR35 they will not take ErNIC out of your day rate, but cover it themselves. So it will be only personal tax and EmNIC.

Now, since this is not related to the LTD, I am asking here and not my accountant.

What tax code I need to use for the second job? Is it still 1250L? Do I need to give then P45? Assuming I want to stay in my main job in my LTD.
Any done it?

[RyanDS]

I would assume use full tax code PAYE, and for your LTD only pay yourself dividends. Either way you are going to be a lot less tax efficient than LTD only.

[northernladuk]

Hi all,

My situation is:

Director of LTD
Also employee of LTD - contract, payslips, etc
Using tax code 1250L

You are? That's very unusual. A contract of employment between you and your LTD? Payslips alone don't make you an employee. Why have you done this?

There is a possibility to start a new 4 months contract as a PAYE contractor. It seems they name it like this because although it is inside IR35 they will not take ErNIC out of your day rate, but cover it themselves. So it will be only personal tax and EmNIC.

I'm not sure that's an assumption you can make from being PAYE is it? PAYE is a broad term meaning you are paying as you earning. I didn't think it differentiated what the details were?
Make sure you read the details very carefully and get them to send you a very clear example of how it will work to avoid any surprised. Don't wait until your first payment.

Now, since this is not related to the LTD, I am asking here and not my accountant.

Any decent accountant who values your business should be able to help. They do your SA after all. Mine helped when I was in this situation.

What tax code I need to use for the second job? Is it still 1250L? Do I need to give then P45? Assuming I want to stay in my main job in my LTD.
Any done it?

The main job bit, although worded oddly.. is a company question so your accountant should be able to help. Why would you need to give them a P45. You aren't leaving work.

I went Brolly for a short term while just doing nothing with the LTD. I cant remember having to tell then what code it was. Just filled the paperwork in got on with the gig. Got a P45 at the end and gave it all to my accountant to sort out.

[DolanContractorGroup]

Hi all,

My situation is:

Director of LTD
Also employee of LTD - contract, payslips, etc
Using tax code 1250L

There is a possibility to start a new 4 months contract as a PAYE contractor. It seems they name it like this because although it is inside IR35 they will not take ErNIC out of your day rate, but cover it themselves. So it will be only personal tax and EmNIC.

Now, since this is not related to the LTD, I am asking here and not my accountant.

What tax code I need to use for the second job? Is it still 1250L? Do I need to give then P45? Assuming I want to stay in my main job in my LTD.
Any done it?

We would recommend you speak to your Accountant to review the situation and provide personal tax planning for you to ensure you are still trading as tax-efficiently as possible.

If you still are planning to take a salary from your LTD company, you would most likely need to complete a starter declaration form for the new role and tick Option C. Your tax code for the new employment may not be 1250L, but perhaps BR, a reduced code, or even an emergency tax code. HMRC would review your earnings and issue a new code - but may not be sent until you're quite far into the 4 months, depending on how fast they are!

I hope this helps.

KR
Sophie

[pscont]

You are? That's very unusual. A contract of employment between you and your LTD? Payslips alone don't make you an employee. Why have you done this?


I'm not sure that's an assumption you can make from being PAYE is it? PAYE is a broad term meaning you are paying as you earning. I didn't think it differentiated what the details were?
Make sure you read the details very carefully and get them to send you a very clear example of how it will work to avoid any surprised. Don't wait until your first payment.



Any decent accountant who values your business should be able to help. They do your SA after all. Mine helped when I was in this situation.


The main job bit, although worded oddly.. is a company question so your accountant should be able to help. Why would you need to give them a P45. You aren't leaving work.

I went Brolly for a short term while just doing nothing with the LTD. I cant remember having to tell then what code it was. Just filled the paperwork in got on with the gig. Got a P45 at the end and gave it all to my accountant to sort out.

Technically the PAYE role has nothing to do with the LTD more than adding to my personal annual income that I got from the LTD as salary.
I do my own SATR, so my LTD accountant dont have a say and/or responsibility for this as well.
I read somewhere that I need to use BR code for second job, but I am not quite clear as to why and/or when.

[Lance]

I do my own SATR, so my LTD accountant dont have a say and/or responsibility for this as well.
I read somewhere that I need to use BR code for second job, but I am not quite clear as to why and/or when.

Two things jump out at me.
The first is fair enough. On its own.
The second is why the first is questionable.
Perhaps you should ask your accountant to so the SA so you don't have issues with the second point (and any others).
It's generally very simple, but the fact that you aren't aware how to do it suggests that you should get professional advice.


Moving on. If you don't provide a P45 to your new employer you will be on an emergency tax code. That will tax you at the BR for all your income (assuming you don't go over £50k). Any overpaid tax will be returned at SA time.
If you do get a P45, and in effect are no longer 'employed' by your LTD. you must stop drawing a salary. I'm not sure if this is even legal though. So I'd stick with the emergency tax code..... Actually I'd ask my accountant rather than just guess at it, but emergency tax code works just fine.

[northernladuk]

It would be useful if we got to the bottom of whether he really is employed by his limited or one of those mistake newbies make.

If he is employed he'll be subject to NMW so paying over the odds which directors don't have to

[pscont]

Two things jump out at me.
The first is fair enough. On its own.
The second is why the first is questionable.
Perhaps you should ask your accountant to so the SA so you don't have issues with the second point (and any others).
It's generally very simple, but the fact that you aren't aware how to do it suggests that you should get professional advice.


Moving on. If you don't provide a P45 to your new employer you will be on an emergency tax code. That will tax you at the BR for all your income (assuming you don't go over £50k). Any overpaid tax will be returned at SA time.
If you do get a P45, and in effect are no longer 'employed' by your LTD. you must stop drawing a salary. I'm not sure if this is even legal though. So I'd stick with the emergency tax code..... Actually I'd ask my accountant rather than just guess at it, but emergency tax code works just fine.

Thanks. I know very well that all will fall in place at the time of next SATR. It seems it will less than £50k altogether.
I was not sure if using the wrong code (eg. BR) will be a problem if I need to get/pay money to HMRC at SATR time. Reading you probably not.

[Lance]

Thanks. I know very well that all will fall in place at the time of next SATR. It seems it will less than £50k altogether.
I was not sure if using the wrong code (eg. BR) will be a problem if I need to get/pay money to HMRC at SATR time. Reading you probably not.

New employer will have to use emergency code in the absence of a P45.
It's not a problem, but the employer HR might not like it. Best check with them for sure.

[pscont]

It would be useful if we got to the bottom of whether he really is employed by his limited or one of those mistake newbies make.

If he is employed he'll be subject to NMW so paying over the odds which directors don't have to

Well, if you want to get to the bottom, be my guest. Start by explaining what an employee is and what it is not.
Than I will send you my accountant's opinion and we can take it from there.
I dont suppose you think I will start explaining myself to an irritating stranger in a forum, don't you?