P45 and Tax. Permanent > Contract mid-Fiscal Year.

[topper]

I was always one for overdrawing the DLA at the end of the tax year if I wanted to withdraw some more cash from my company but it should be noted that this does not save any tax, it just defers it until the following tax year.

I'll make sure to run through all this with my accountant, but just to confirm by what you mean about if deferring to the next year, that is only if I take the same out as I would have earned as a permie, it's not deferred if I stay under the higher tax band.

[Gonzo]

I'll make sure to run through all this with my accountant, but just to confirm by what you mean about if deferring to the next year, that is only if I take the same out as I would have earned as a permie, it's not deferred if I stay under the higher tax band.

If you can stay below the higher rate tax band in the following tax year then you will have avoided the higher rate tax on the money that you took as a Directors Loan.

If you can't stay below the higher rate tax band then you have just deferred the tax bill on that money for one year by using the Directors Loan instead of taking a dividend.

I tended to use the Directors Loan Account to withdraw money from the company at the end of the tax year, but I could never stay below the higher rate tax band so the effect was only to defer the tax on those drawings to the following tax year.

[jsnetman]

Similar Position

Hi,

In a similar position to the initial posting, left permanent employment to go contracting in July 2011, had been paid more than the threshold in previous employment so have not paid myself any formal wages and was looking to register for PAYE before April this year.

Sould I have filled out a self assessment this February?

I know some of you will say get an accountant but decided to try and do it myself as I'm not in the VAT bracket and decided my business and accounts would be straight forward. The only thing that baffles me is the PAYE and self assesment part of it, have tried researching it but it just gets more complicated the more I read.

[Clare@InTouch]

Hi,

In a similar position to the initial posting, left permanent employment to go contracting in July 2011, had been paid more than the threshold in previous employment so have not paid myself any formal wages and was looking to register for PAYE before April this year.

Sould I have filled out a self assessment this February?

I know some of you will say get an accountant but decided to try and do it myself as I'm not in the VAT bracket and decided my business and accounts would be straight forward. The only thing that baffles me is the PAYE and self assesment part of it, have tried researching it but it just gets more complicated the more I read.

If you were perm until July 2011 then your first tax return should be for 11/12 - covering 06/04/2011 to 05/04/2012. The tax returns that have just been submitted covered the previous year. If you're not sure then call HMRC and ask them - have your NI number and UTR to hand (you would have been allocated a UTR when you notified HMRC you were a director, which you should have done when started). The contact number you need is here: HMRC Contact us

PAYE is totally separate, and relates to any wages you pay yourself. You need to set up a PAYE scheme, which you can do online here: HM Revenue & Customs: Register as an employer by email

Regarding the VAT, you may want to consider registering even if you're below the bracket as you can then benefit from the Flat Rate Scheme.

If it's your first year and you're confused about the basics then it's worth talking to an accountant. By all means do it all yourself in the second year if you're confident, but it's handy to get a grounding first and use that year to gain as much knowledge as possible from them. That way you'll know about deadlines, filing, taxes, expenses, IR35 etc when you do it all yourself.

[northernladuk]

Hi,

In a similar position to the initial posting, left permanent employment to go contracting in July 2011, had been paid more than the threshold in previous employment so have not paid myself any formal wages and was looking to register for PAYE before April this year.

Sould I have filled out a self assessment this February?

I know some of you will say get an accountant but decided to try and do it myself as I'm not in the VAT bracket and decided my business and accounts would be straight forward. The only thing that baffles me is the PAYE and self assesment part of it, have tried researching it but it just gets more complicated the more I read.

So get an accountant

[Jeremiah@RHJAccountants]

Hi,

In a similar position to the initial posting, left permanent employment to go contracting in July 2011, had been paid more than the threshold in previous employment so have not paid myself any formal wages and was looking to register for PAYE before April this year.

Sould I have filled out a self assessment this February?

I know some of you will say get an accountant but decided to try and do it myself as I'm not in the VAT bracket and decided my business and accounts would be straight forward. The only thing that baffles me is the PAYE and self assesment part of it, have tried researching it but it just gets more complicated the more I read.

I agree with what Claire said get one at least for the first year.

Also an accountant can advise you on what salary to take and dividneds as some good sound tax planning advise is vital in the first year.

An accountant could also register you with HMRC for PAYE, VAT and self assessment if you are not registered.

[Kugel]

Hi,

In a similar position to the initial posting, left permanent employment to go contracting in July 2011, had been paid more than the threshold in previous employment so have not paid myself any formal wages and was looking to register for PAYE before April this year.

Why register for PAYE in current tax year if you are not paying yourself any salary/wages/expenses/benefits?

Sould I have filled out a self assessment this February?

Not for tax year 2010-11. Unless there are other reasons.

I know some of you will say get an accountant but decided to try and do it myself as I'm not in the VAT bracket and decided my business and accounts would be straight forward. The only thing that baffles me is the PAYE and self assesment part of it, have tried researching it but it just gets more complicated the more I read.

I do not use an accountant. But if PAYE and SA baffles you, you better get one.

[Kugel]

Sould I have filled out a self assessment this February?

SA in February

[Jeremiah@RHJAccountants]

SA in February

The OP may have meant file on either the 1st or 2nd of Feb 2012 as the deadline to file was extended from the normal 31 Jan due to the strikes at HMRC