New to contracting, Ltd Company or PAYE

[2contract]

Hey Folks,

I've been offered a contract that was advertised at £44hr LTD, or £39hr PAYE. The contract is considered inside of IR35.

The pros and cons of each are pretty endless and to be honest there isn't much in it in terms of take home pay.

I personally like the prospect of being in control of the 'company' i.e selecting insurance, pension contributions etc. Not being beholden to a third party to pay me on time etc.

The question is, can I still run a Ltd company who's sole income is from an IR35 Contract? Yes I realise that myself as an employee would have to be on a PAYE Payroll, and that any profit made by the company would be subject to Corporation tax.

Thoughts?

Thanks in advance!

[cojak]

Don't bother with a LTD if it's your first contract and it's inside IR35 - go PAYE.

[Craig@Clarity]

Yes you can run a limited company if you're inside IR35. All; it means is that you just have to ensure you calculate the deemed salary correctly, account for and pay the income tax and NIC over to HMRC . Nothing wrong with running a company that has a contract inside IR35. There's not going to be much difference in terms of take home pay. You're going to have more admin to deal with running a limited company than going PAYE/umbrella but if you can handle that and want to dabble in controlling your affairs, that you can do it.

[eek]

Yes you can run a limited company if you're inside IR35. All; it means is that you just have to ensure you calculate the deemed salary correctly, account for and pay the income tax and NIC over to HMRC . Nothing wrong with running a company that has a contract inside IR35. There's not going to be much difference in terms of take home pay. You're going to have more admin to deal with running a limited company than going PAYE/umbrella but if you can handle that and want to dabble in controlling your affairs, that you can do it.

Um, if you are inside IR35 as of April it's the responsibility of the agency to be making deemed payments and pay the appropriate tax on the companies behalf.

[2contract]

Will going PAYE / Umbrella still allow me to put money in to a nominated Pension (SIPP) before tax?

[eek]

Will going PAYE / Umbrella still allow me to put money in to a nominated Pension (SIPP) before tax?

Given an umbrella company able to offer salary sacrifice (and most apart from the very cheapest will). Just phone up your choice of umbrella companies and ask them if they can do it to your pension company and what the cost will be.

[northernladuk]

Yes you can run a limited company if you're inside IR35. All; it means is that you just have to ensure you calculate the deemed salary correctly, account for and pay the income tax and NIC over to HMRC . Nothing wrong with running a company that has a contract inside IR35. There's not going to be much difference in terms of take home pay. You're going to have more admin to deal with running a limited company than going PAYE/umbrella but if you can handle that and want to dabble in controlling your affairs, that you can do it.

You can... but you can't. very few agents will deal with LTD's for inside gigs so the above is unlikely to be an option. The OP might have mentioned it but I've a sneaking suspicion he hasn't asked all the right questions yet.

[northernladuk]

Will going PAYE / Umbrella still allow me to put money in to a nominated Pension (SIPP) before tax?

Some will.. What you need to check is what options you have. Many agents have a preferred list where they've done the diligence and trust the umbrella, commonly knowns as getting a kickback.

I don't think the details you've posted paint the full picture so I'd find out options you've got before getting giddy about having the world to chose from. Very rare to find an agent that is open to any idea without constraints.

[Craig@Clarity]

You can... but you can't. very few agents will deal with LTD's for inside gigs so the above is unlikely to be an option. The OP might have mentioned it but I've a sneaking suspicion he hasn't asked all the right questions yet.

To my knowledge at the present time, most agency still offer "IR35 friendly" contracts and as we all know, it's up to the consultancy company to determine their own employment status (in the private sector), so they can still freely contract through their PSC? Post 5 April, I'm aware some agencies will push heavily for workers (as I've seen a few pressured into this route before the off-payroll rules were postponed) to go through their preferred brolly but technically there is still nothing stopping them using their own limited company and dealing with the deemed payment. In reality, I'd bow down to your experience in the sector as to whether inside gigs are likely not to be an option. Personally, my clients who are inside, at present, are still happily trading through their PSC and dealing with the deemed salary as normal.

[northernladuk]

To my knowledge at the present time, most agency still offer "IR35 friendly" contracts and as we all know, it's up to the consultancy company to determine their own employment status (in the private sector), so they can still freely contract through their PSC? Post 5 April, I'm aware some agencies will push heavily for workers (as I've seen a few pressured into this route before the off-payroll rules were postponed) to go through their preferred brolly but technically there is still nothing stopping them using their own limited company and dealing with the deemed payment. In reality, I'd bow down to your experience in the sector as to whether inside gigs are likely not to be an option. Personally, my clients who are inside, at present, are still happily trading through their PSC and dealing with the deemed salary as normal.

The point was specifically about the payment method. It's either agency PAYE or umbrella. Very few are allowing payments directly to the limited as it exposes them to risk doesn't it?

The vast majority of questions we've seen from people moving inside did not have a LTD option. That may not be the best measure but knowing agencies and risk I'd be surprised if too many, particularly the big ones will offer it.

Very happy to be corrected.