How do I calculate my tax liability as if I was a PAYE employee

[SwissSaffa]

What with the MSC investigations going on, I want to calculate what HMRC might try to claim that I owe.

So I have my self-assessment tax forms for the last couple of years and I know what my limited company paid me every year.

Is the calculation as simple as putting in the total earned income (mainly dividends, salary) for that tax year into listentothetaxman and then calculating the difference between the tax due in that calculator to the tax which I paid as indicated on my self-assessment form or is that the calculation completely off and its much more complicated?

[eek]

Not quite

it will be total company income in the year less pension contributions.

then deduct 13.8% (employer NI) to get your gross income and put that in a tax calculator.

then add the 13.8% back to the total tax.

[oleanderwand]

Can this link help?

https://www.gov.uk/hmrc-internal-man...manual/esm3500

Then go to its subsequent links from ESM3535 to ESM3555 which details how to calculate it. They are not straight forward but should give some guidance I think.

[eek]

Can this link help?

https://www.gov.uk/hmrc-internal-man...manual/esm3500

Then go to its subsequent links from ESM3535 to ESM3555 which details how to calculate it. They are not straight forward but should give some guidance I think.

Did you read what I posted because my steps are the same (given the time frame is post 2016 there are likely to be no expenses allowed unless your PSC was invoicing your end client directly and separately for expenses)..

[oleanderwand]

Ah, yes, the 5% expenses allowance was abolished. Thank you Eek.

[PerfectStorm]

What MSC investigations?

[eek]

What MSC investigations?

Churchill Knight and Boox see Churchill Knight clients being investigated as Managed Service Companies - Contractor UK Bulletin Board

[JHamp82]

Not quite

it will be total company income in the year less pension contributions.

then deduct 13.8% (employer NI) to get your gross income and put that in a tax calculator.

then add the 13.8% back to the total tax.

I may be wrong though but I think the calculation will be as follows:

Total Turnover £100,000
Pension contributions £5,000
Employer NI £11,520 (£95,000/113.8X13.8)
Salary £83,479.79

Then whatever the Tax and NI will be on £83,479.79 in this example plus £11,520 will be total liability.

This is what I was told by my accountant so hopefully its the correct way of calculating deemed payment.

There is also a calculator produced by HMRC themselves to calculate the above, although it only goes up until 18/19 but will be useful to understand the calculation.
http://www.hmrc.gov.uk/gds/ir35/ir35.xlt

[Hareforthebear]

Apologies if this is a silly question, but in the context of the MSC Investigations, should the client companies be found liable, would the corp tax and personal tax previously paid be offset against the above?

[eek]

Apologies if this is a silly question, but in the context of the MSC Investigations, should the client companies be found liable, would the corp tax and personal tax previously paid be offset against the above?

Pass - and I say that because technically it's past the point that the corporation tax could be reclaimed.