Own LTD. Sharing 6 months of experience

[maxima]

As some of you I was working under Giant umbrella until Labours decided they need more cash to fund their mega-project to bringing the country into havoc.

I spent quite a lot of time in researches (including reading this forum) and I had an impression that whatever you do if you want to stay within law and still get some money out of your sweat you have to run Ltd.

After 6 months of hard work I suddenly realised that my wife who is on perm and pays PAYE has more cash than me. <skipping emotions>

So I open my Excel and found interesting numbers. I really hope I did do some numbering wrong! Please correct me!

But so far - in my case - Ltd is worse than PAYE .. I will be happy if someone can proof me wrong.

Here are input numbers from my accountant and then projection of Income Tax I will pay by the end of the year, compared to what I would pay if I had PAYE.

[VectraMan]

Here are input numbers from my accountant and then projection of Income Tax I will pay by the end of the year, compared to what I would pay if I had PAYE.

Where?

[TheFaQQer]

Depends if you're comparing like with like.

A permie, paying PAYE on £2 million a year will be taking home more money than a contractor on £500 a day.

If you can do better in a permie role, and want to be a permie, then go do it. I don't do this for the money itself, it's for the ability to take more time off to spend with the family.

[Old Greg]

Are you operating as if outside IR35?

[maxima]

Yes - outside IR35

[maxima]

Ok here we go:

In: 11000 (121000 a year)
Cash: 7450 divs, 1050 salary and pension.
In roughly 11 months (minus holidays, xmas etc) it will make 93500.

Income tax: 11000 of salary will take lower bands. 82000 of divs - the rest. Including 10% tax credit I figure out that my tax will be 14600.

Flat rate VAT advantage (less corp tax, less 32.5% income tax) 3000.

So balance is:
cash in (7450+1050) * 11 = 93500
less income tax 14600
more VAT surplus 3000
accounting, insurances to run Ltd roughly - less 2000.
Total cash: 80000. which makes 80000 * 100% / 121000 = 66%

[maxima]

Now if I had paid PAYE from 121000 I would have 81000....


This also includes - no risk of spending nerve on IR35 thoughts. No risk to have visit from milking cow operators, no paperwork, no nothing as some may say....

[maxima]

Am I wrong or whole LTD thing is just a big con from certain accounting companies?

[gadgetman]

Including both employers and employee NI?

Now if I had paid PAYE from 121000 I would have 81000....


This also includes - no risk of spending nerve on IR35 thoughts. No risk to have visit from milking cow operators, no paperwork, no nothing as some may say....

[Bluebird]

Now if I had paid PAYE from 121000 I would have 81000....


This also includes - no risk of spending nerve on IR35 thoughts. No risk to have visit from milking cow operators, no paperwork, no nothing as some may say....

From £121k you'd take home £77k after tax.