Limited Company in IR35

**kingcook** · 20 February 2013, 14:49

Originally posted by maker View Post

Hi

I wonder if anyone can help.

I have been working through my limited company for several months now and invoicing the client - I believe I am captured by IR35 which removed the advantage of being able to take dividends.

It seems that if i want to take the cash out of the business, I can only have salary for which I will be paying

PAYE 40% (for some of the salary)
NIC 11%
Employers NI 12.8%

Would it make sense to not pay any salary and pay corporation tax on the profit? if so, is the net amount that's left, mine to withdraw as cash?

Well done! You've found the workaround for IR35. Congrats! This is what we've all been waiting for!!

**ASB** · 20 February 2013, 14:57

Suggest you look up deemed payment calculation on the inland revenue site (and read the guides on the right).

Your understanding is currently somewhat lacking.

Basically whether you take it as salary or not then you are going to pay income tax and NI on it

**DaveB** · 20 February 2013, 15:00

Originally posted by maker View Post

Hi

I wonder if anyone can help.

I have been working through my limited company for several months now and invoicing the client - I believe I am captured by IR35 which removed the advantage of being able to take dividends.

It seems that if i want to take the cash out of the business, I can only have salary for which I will be paying

PAYE 40% (for some of the salary)
NIC 11%
Employers NI 12.8%

Would it make sense to not pay any salary and pay corporation tax on the profit? if so, is the net amount that's left, mine to withdraw as cash?

Did you get your contract reviewed? Have you reviewed your working practices? Do that before deciding you are IR35 caught.

Otherwise, to answer the final question: No, you can't just draw the remaining money as cash. If you really are IR35 caught it must be paid as salary (less the 5% allowance for expenses) with the commesurate PAYE/NI.

**northernladuk** · 20 February 2013, 15:01

Jesus Christ.....

**northernladuk** · 20 February 2013, 15:01

BP having a quiet day at his gig today?

**ASB** · 20 February 2013, 15:06

Originally posted by DaveB View Post

If you really are IR35 caught it must be paid as salary (less the 5% allowance for expenses) with the commesurate PAYE/NI.

No it doesn't have to be paid as salary.

It just has to be taxed as though it was. (I can't imagine any circumstances when it would be sensible to do this and leave the funds in the company, but it is an option).

**ASB** · 20 February 2013, 15:07

Originally posted by northernladuk View Post

Jesus Christ.....

Disappointed there. Are you not well ?

**LisaContractorUmbrella** · 20 February 2013, 15:23

Assuming that you are not BP in sockie form, You really need to read up on IR35 and understand fully the effect that it has on your business. If you don't have a specialist accountant who understands the legislation that affects contractors then now may be a good time to get one

**northernladuk** · 20 February 2013, 15:28

Originally posted by ASB View Post

Disappointed there. Are you not well ?

Mods on the prowl. Not the best time to use the term moronic amongst others.

Limited Company in IR35