MSC Solution

[Tinker]

I'm really really sorry if this has been covered before - have read the stickies but couldn't find anything to exactly answer my query:

I have, up until now, been run as an MSC. Not sure if my contract would stand up to close IR35 inspection and so I've decided to not go down the limited company route.

The solution offered to me is to remain as an MSC but from now on I'll be taxed as PAYE.
This is apprently more tax efficient than umbrella as the legislation to pay NI on what was previously dividend income does not come into force until August. At that point I'll move to an umbrella.

Does the above sound like a sound and good solution?

Thanks and apologies again if this has already been covered.

[Bluebird]

sorry - are you using a Ltd company or paid direct by the agency ?

[Tinker]

Ltd company. The firm who I'm with have a ltd company on my behalf.

They invoice the agency, the agency pays them, they take off tax etc and then pay me.

[Bluebird]

Ltd company. The firm who I'm with have a ltd company on my behalf.

They invoice the agency, the agency pays them, they take off tax etc and then pay me.

sounds to me like they are an MSC in which case you need to pay full PAYE & NI.

[Tinker]

sounds to me like they are an MSC in which case you need to pay full PAYE & NI.

Yes I will be run as an MSC but they are saying that I do not need to pay NI on income that I previously received as dividends until August..
a) does that sound right?
b) will I now be off the IR35 radar?

Thanks for your help so far

[Bluebird]

Yes I will be run as an MSC but they are saying that I do not need to pay NI on income that I previously received as dividends until August..
a) does that sound right?
b) will I now be off the IR35 radar?

Thanks for your help so far

I presume they are talking about the finance bill getting "royal ascent" in Aug, not sure but even though the legislation is "approved" in August it still refers to April 6th so will be applied retrospectivlely....might need to check on this last point.

If you go PAYE then IR35 doesn't apply - if you aren't then it does...

[Tinker]

I presume they are talking about the finance bill getting "royal ascent" in Aug, not sure but even though the legislation is "approved" in August it still refers to April 6th so will be applied retrospectivlely....might need to check on this last point.

If you go PAYE then IR35 doesn't apply - if you aren't then it does...

Good point about the retrospective bit - will check with them and see what they say..

[PAG]

Yes I will be run as an MSC but they are saying that I do not need to pay NI on income that I previously received as dividends until August..
a) does that sound right?
b) will I now be off the IR35 radar?

Thanks for your help so far

Whoever you join ... you do not need to pay NI on income you already received as dividend, however hector can come after you and ask you on what grounds did you take dividend and not PAYE.

Since you are going to be PAYE you will off IR35 HENCEFORTH.

[Tinker]

Whoever you join ... you do not need to pay NI on income you already received as dividend, however hector can come after you and ask you on what grounds did you take dividend and not PAYE.

Since you are going to be PAYE you will off IR35 HENCEFORTH.

The company I'm with are going to start treating my income as PAYE, previously it was dividend income.
However they are saying that I don't need to start paying NI until August.
They are basically saying that, due to the new legislation, my MSC income will be taxed as PAYE income with immediate efffect but the additional NI deductions, that are also going to be applied to MSCs, will only start from August onwards.

I asked whether in August, NI would be retrospectively from April 6th onwards and they said 'no' only income after August will have the additional NI payable...

[Bluebird]

I thought PAYE was Income tax & NI ????


If you have, say £5000 how can they apply Income Tax to the £5k but Ni to only minimum wage element of that ?

Aren't you either PAYE or Not, and if you are then that includes NI ???

I'm sure I'm missing something [ a brain perhaps ?]