Own LTD. Sharing 6 months of experience

[maxima]

my expenses about 300 a month and they are real. so i didnt count them.

[maxima]

Including both employers and employee NI?

Ok I didnt know about that..

So basically it makes more sence but doesnt change the picture. for 3000 a year it doesnt worth my time.

[Bluebird]

Ok I didnt know about that..

So basically it makes more sence but doesnt change the picture. for 3000 a year it doesnt worth my time.

providing you can get someone to pay you £121k PA on PAYE - which may not be that easy.

Also you don't take any account of "expenses" that you can put through the business and effectivly get back without being taxed.

Do you travel to your gig ?

[Bluebird]

my expenses about 300 a month and they are real. so i didnt count them.

Rignt so if you paid them as a permie you'd have paid them AFTER tax as opposed to before tax - thats about £700 extra in your pocket.

[malvolio]

Ok I didnt know about that..

So basically it makes more sence but doesnt change the picture. for 3000 a year it doesnt worth my time.

So basically you are calculating net figures without understanding and including all the elements? Hmmm....

Also to make the comparison valid, you need to work your LtdCo income over the full 365 days, since that is the true equivalent for comparison. However, on your numbers I make it roughly £82k net as a LtdCo and £77k as a permie. But the true equivalent permie wage to £121k gross as a contractor is about £65k...

[maxima]

providing you can get someone to pay you £121k PA on PAYE - which may not be that easy.

How is contracting through PAYE can affect employer's interest?
I already agreed that I did mistake about employers NI. So I count now 77k not 81k.

Also you don't take any account of "expenses" that you can put through the business and effectivly get back without being taxed.

Do you travel to your gig ?

Ok. here. in thouse 300 - there are 150 a month which is real real and 150 which I wouldnt spend if I was permie.

I dont see other 'expenses' I can do. I travel on the tube and I dont claim subsistence. I am ideal husband!

[DaveB]

Enough of us are doing it that we know we are better off this way.

1. You dont appear to be claiming any expenses in those figures. Do you not have any claimable expenses at all? If you are paying for things as a result of your business then it is claimable. Traval at 40p per mile etc. At £300 per month thats £3300 pa you should be claiming back before tax.

2. Your Income tax calculations seem a little off.

3. Your monthly salary is quite high.

Based on your rate of around £550 a day on those figures you should be taking home around £80k pa.

Here are some calculations to compare with.

Your Rate £550 per day
Days per week 5
Weeks per year 44
Salary £6,000
Legitimate section 98 expenses £3,000
Pension contributions £0
Other income £0
Tax code 522L
Dividend percentage 100%

Company Income Contract revenue £121,000
Other income £0
Total revenue £121,000
Company Expenditure Expenses £3,000
Employers N.I. on salary £102
Salary £6,000
Pension contributions £0
Total expenditure £9,102
Company profit £111,897
Corportation tax £22,379
Distributed profits £89,518
Tax Calculations Taxable Income (salary + net dividend) £95,518
Employees NI £88
PAYE £77
Additional tax on dividends (1st share) £14,767

Personal Income Net Annual Income £80,584
Net Monthly Income £6,715


PAYE on £121,000 is around £77k.

[Bluebird]

So basically you are calculating net figures without understanding and including all the elements? Hmmm....

Also to make the comparison valid, you need to work your LtdCo income over the full 365 days, since that is the true equivalent for comparison. However, on your numbers I make it roughly £82k net as a LtdCo and £77k as a permie. But the true equivalent permie wage to £121k gross as a contractor is about £65k...

Mal, I made it about £82 as well, but that was using a take-home salary of £750 PCM.

So it does work out about £5k better off - which is still £416 per month.

It also doesn't take into account all the other "expenses" you can claim if you so wish - computers etc.

What one has to consider is that the £500 laptop will cost you £500 as a contractor, but £650 in equivilent terms for a permie....

[DaveB]

How is contracting through PAYE can affect employer's interest?
I already agreed that I did mistake about employers NI. So I count now 77k not 81k.


Ok. here. in thouse 300 - there are 150 a month which is real real and 150 which I wouldnt spend if I was permie.

I dont see other 'expenses' I can do. I travel on the tube and I dont claim subsistence. I am ideal husband!

You can claim back a substantial portion of your tube pass costs for a start. 5/7ths would be the logiocal amount but I belive HMRC calculate if slightly differently.

If you have an office at home that you use for running hte business you can claim costs for that as well. There is a formula to use based on the number of roms in your house/flat divided against the monthly costs for lighht heating etc.

Put your mobile phone and home internet contracts in the co. name and you can claim expenses there as well.

It sounds like you really need to get yourself an accountant to go through it with you. A good accountant will save you more money than you pay him, and it's tax deductable as well!

[Bluebird]

How is contracting through PAYE can affect employer's interest?
I already agreed that I did mistake about employers NI. So I count now 77k not 81k.


Ok. here. in thouse 300 - there are 150 a month which is real real and 150 which I wouldnt spend if I was permie.

I dont see other 'expenses' I can do. I travel on the tube and I dont claim subsistence. I am ideal husband!

I may have re-misinterpeted your post - what I was saying is that the cost to a "business" of an £121k contractor is £121k.
The cost to a business of an £121k PERMIE is a hell of a lot more.....

The employer having to pay NI is just one cost they have to cover - they also have to factor in any sickness you may take etc.

Thats why I said you are unlikely to get a company to offer the same day rate for permie and contractors - as Mal said the equivilent for £550pd is about £65k PA permie which would give you a take home of about £43k.