Role Change - Potential Working Arrangements

[northernladuk]

Just use an umbrella, throw as much as you can into your pension and use some of your savings.

Trust me you will be quids in.

That's not the answer he wants to hear though.

[jamesbrown]

Thanks.

Just to clarify - The new role is not IT. It is a Risk Manager role.

So, in summary:
Previous Role - IT BA Consultant via a Consulting firm
New Role - Risk Manager directly contracting with the Client

I think you probably don't believe your own arguments, hence your attempt to "pad" your explanation, as though operating via a consulting firm versus contracting directly to the client is relevant here. A "trade" is very clearly defined. An "activity", not so much, but that only makes the TAAR more broadly drawn, not less. You are continuing a "trade", so that part is indisputable.

If you are continuing a trade across an MVL (within two years of the last distribution) and using a professional skillset that is broadly related to the skillset used previously (like, I don't know, consulting for the same client! ), you are going to be a fantastic test case for HMRC. Again, you are among a large number of people that come here looking for comfort rather than actual advice. That is your prerogative, of course, and good luck to you, but Option 1 is only an option in your head.

[Costa]

Just use an umbrella, throw as much as you can into your pension and use some of your savings.

Trust me you will be quids in.

Thanks.

Yes, that is certainly an option under consideration.

Just that I have already made enough contributions to pension, so not overly keen on adding more (though I might add some, if I go down this route).

Slight diversion, but may I please ask (if you readily know, as that is a topic I planned to research over the weekend, as part of my due diligence) -
What are the taxation rules for the excess part of the pension (in SIPP) that goes above the Lifetime Allowance (currently £1.073m)?

My rough understanding is that excess would be taxed at 55% if we take it as a lump sum; and 25% + Marginal Income Rate if we take that as Drawdown.

However, what are the rules for handling that "excess" (above the Lifetime Allowance), in the event of death before 75 or after 75?
For example, I think normal SIPP amount (below Lifetime Allowance) gets passed on free of IHT if death is before 75; does the same apply to the "excess" part too, or will that have the 25% tax applied before being passed on?
What about death after 75, will the 25% tax be applied on the excess there too, and then the rest taxed when taken out as per the beneficiary's Marginal Income Tax rate?

[Costa]

What's the point. You haven't listened to a single thing anyone has said so yeah that's a good idea so go fill your boots. You really aren't going to find the answer you want to hear here.

Thanks.

I think I have listened to everyone, and thanked and politely responded to all comments, with due respect.

There is no specific answer I want to hear (and I won't follow any answer blindly anyway, as ultimately I have to take the responsibility of the decision, not any forum member).

And that is precisely the point. I want to hear all views (from those who wish to respond of course), to ensure there is no point I am missing in my thought process, and will then make an informed decision accordingly.

[Costa]

I think you probably don't believe your own arguments, hence your attempt to "pad" your explanation, as though operating via a consulting firm versus contracting directly to the client is relevant here. A "trade" is very clearly defined. An "activity", not so much, but that only makes the TAAR more broadly drawn, not less. You are continuing a "trade", so that part is indisputable.

If you are continuing a trade across an MVL (within two years of the last distribution) and using a professional skillset that is broadly related to the skillset used previously (like, I don't know, consulting for the same client! ), you are going to be a fantastic test case for HMRC. Again, you are among a large number of people that come here looking for comfort rather than actual advice. That is your prerogative, of course, and good luck to you, but Option 1 is only an option in your head.

Thanks.

Not sure what your reference is to padding and not believing my own arguments (and where that inference comes from). I simply copy pasted the same info that I had provided in an earlier response to NLUK (which was also included in my original post, but just summarised that to make it clearer).

And yes, operating via consulting firm, or contracting directly with the client, may not be relevant (and can be ignored, if not relevant). I was just trying to provide as clear a picture of my situation as I could (as generally, providing as much info as possible upfront helps the forum members provide their inputs accordingly).

[northernladuk]

Thanks.

I think I have listened to everyone, and thanked and politely responded to all comments, with due respect.

There is no specific answer I want to hear (and I won't follow any answer blindly anyway, as ultimately I have to take the responsibility of the decision, not any forum member).

And that is precisely the point. I want to hear all views (from those who wish to respond of course), to ensure there is no point I am missing in my thought process, and will then make an informed decision accordingly.

Sorry but you don't seem to be listening. You say..

If TAAR is not a significant risk, due to the role change (and wider circumstances around company closure), then may go with Option 1 (new Limited Company).

Why is this still an option? Not one single person has agreed the role change makes one iota of difference and have all pointed out it's covered yet you are still touting this as your main option.

Dunno why I'm replying really I'm done with this one. Nothing else I can add.

[jamesbrown]

Thanks.

Not sure what your reference is to padding and not believing my own arguments (and where that inference comes from). I simply copy pasted the same info that I had provided in an earlier response to NLUK (which was also included in my original post, but just summarised that to make it clearer).

And yes, operating via consulting firm, or contracting directly with the client, may not be relevant (and can be ignored, if not relevant). I was just trying to provide as clear a picture of my situation as I could (as generally, providing as much info as possible upfront helps the forum members provide their inputs accordingly).

You're being nominally polite, but you aren't really listening. Again, best of luck to you, but you will be caught by the TAAR. There are plenty of ambiguous situations, but the TAAR was really made for the situation you describe.

Likewise on your IR35 status, I highly doubt the proposed contract is outside IR35, regardless of what you or the client choose to believe, but I doubt you will listen on that either.

The strong advice you've been given by several knowledgeable people is to go via an umbrella.

[Costa]

Sorry but you don't seem to be listening. You say..


Why is this still an option? Not one single person has agreed the role change makes one iota of difference and have all pointed out it's covered yet you are still touting this as your main option.

Dunno why I'm replying really I'm done with this one. Nothing else I can add.

Thanks.

Oh, reading ".. yet you are still touting this as your main option", I can now guess where the confusion may be.
I never intended the three options to be in the order of decreasing preference from my own viewpoint. So, Option 1 has not been the "main" option, even before I started the discussion here.

I just listed three options, and numbered them, so that they are easier to refer to, in subsequent discussions. And I have retained that numbering in further comments, to ensure there is no confusion about which option we are referring to.

As I mentioned earlier, intention was to discuss the pros and cons of all options (that's why I provided few initial points also for all options). May be I should have called them X, Y, Z instead of 1, 2, 3.

[Costa]

You're being nominally polite, but you aren't really listening. Again, best of luck to you, but you will be caught by the TAAR. There are plenty of ambiguous situations, but the TAAR was really made for the situation you describe.

Likewise on your IR35 status, I highly doubt the proposed contract is outside IR35, regardless of what you or the client choose to believe, but I doubt you will listen on that either.

The strong advice you've been given by several knowledgeable people is to go via an umbrella.

Thanks.

Your input on TAAR has been noted.

Regarding the IR35 status of the new contract, will await further clarity from the client, agency and their IR35 advisors.

[WTFH]

Regarding the IR35 status of the new contract, will await further clarity from the client, agency and their IR35 advisors.

In your first post you said that the potential new contract was direct.
If it's direct, then why is an agency involved?
Also, if you are going through an agency, I'd advise you to get independent IR35 advice, as I strongly suspect the agency advisors will provide carefully worded advice that is the best result for the agency.