LTD vs PAYE

[businessor]

Hello

I am a normal employee with 50k salary. I have been offered an additional contract as PAYE or LTD which pays 100k.

Can you tell me please what will I be taking home as PAYE and LTD?

Since I have already a salary of 50k, my tax rates will be already high.

Thanks!

[malvolio]

Quick answer? No, we can't. Too many variables and nowhere near enough information.

[NowPermOutsideUK]

As paye on 100k which is 8.5 a month expect just under 4K a month after tax

Ltd will be better if you don’t need the money and keep it in the company obviously and also if really are outside ir35 which is now a big deal

[northernladuk]

As paye on 100k which is 8.5 a month expect just under 4K a month after tax

Ltd will be better if you don’t need the money and keep it in the company obviously and also if really are outside ir35 which is now a big deal

The IR35 comment really shouldn't be at the bottom of your advice. Before he goes any further he needs to find out the situation. I strongly suspect its inside but he can use his LTD to run PAYE so he can't keep it in the money.

The OP has given far too little information to be even guessing answers for them. I suspect his understanding is so poor trying to guess an answer would not be helpful.

[malvolio]

The IR35 comment really shouldn't be at the bottom of your advice. Before he goes any further he needs to find out the situation. I strongly suspect its inside but he can use his LTD to run PAYE so he can't keep it in the money.

The OP has given far too little information to be even guessing answers for them. I suspect his understanding is so poor trying to guess an answer would not be helpful.

WHS. And WIS...

[northernladuk]

WHS. And WIS...

Shame Gricer didn't say it as well.

[eek]

As others have said your post makes little sense.

In the current world no agency is going to offer you LTD and PAYE options, they will offer you either a Ltd option (if outside IR35) or an Umbrella (with possibly a PAYE) option if inside IR35.

Before we can offer you any more advice you need to be very clear over what you are being offered.

[businessor]

Thanks for your reply.

What are the variables that are needed to answer the question?

I built a small model for each options:

1) for PAYE, I apply a 40+2% tax and NI, which means I get home 4,833 per month
2) for LTD, I subtract 1,000pm for costs, on the rest I apply 19% corp tax and on the rest minus the 2000/12 dividend allowance, I apply a 32.5% dividend tax. After I subtract these two taxes, I get home 5,064 per month.

Are the above accurate? (given that there is already a 50k income from other employment).
If yes then I do not think it justifies the hassle of maintaining an LTD.

Let's assume the LTD option is outside IR35.

Thanks!

[northernladuk]

Let's assume the LTD option is outside IR35.

Thanks!

There really is little point doing all this work until you know if it's inside or out? Why can you not go find this out first? When there is a PAYE option assuming the gig can be outside isn't very safe.

It's very likely if you do all this and find it's inside you are going to be bitterly disappointed in the gig because you will 'feel' like you lost a lot of money. We've seen it enough times. Setting the wrong expectation doesn't help anyone.

Before you do anything, find out exactly what you've got then go from there.

[eek]

You can't assume it's outside IR35 - from April 2021 the decision as to whether it is inside IR35 or outside IR35 isn't your decision.

Plus you would never have 1000 for company costs.