Do i need to pay myself!?

[Daveitcont]

Strange question here. I have created a Ltd company but I am also in full time employment. I want to see how it goes before I do anything drastic like leaving my current job. However, I may start to earn some money with the Ltd company in the near future. This would be weekend or out of hours, very small contracts 1-2 days etc.

My questions is, if I do not currently need the money in my pocket so to speak, can i leave any money I make in a business account until such a time that I leave my job and go it alone? I understand that it would still be subject to corporation tax but is this plausible or am i living in dreamland. I suppose my main worry is that there, in certain lights, may be a slight conflict of interest with my current job and I don't want to tell them I have started my own company. Its a very small company so if the HMRC informed them I have a second job, my manager would immediately find out.

Thanks
Dave

[d000hg]

You do not have to take a salary, or take ANY money out of the company, if you don't want to, as far as I am aware. Although you sometimes see in big businesses people on salaries of £1 so I wonder if there is some significance to taking a salary.

[northernladuk]

Do you really need a limited company to do adhoc work at that level?

[TheCyclingProgrammer]

Do you really need a limited company to do adhoc work at that level?

If he's already a higher rate tax payer then doing the work through a Ltd and paying corporation tax, leaving the profit in the company, is probably not a bad idea tax wise. They will be building up their warchest before they've started full time! Seems pretty sensible to me.

Having said that, there probably is a level at which it's not cost effective due to accountants fees etc. but I'm sure it wouldn't take a lot of work to make it worthwhile, especially if OP is planning to leave their job and do it full time eventually.

OP you don't have to pay yourself a salary or draw any dividends from the company if you don't want to.

[Daveitcont]

Cheers guys, thanks for the advice.

[Contreras]

Assuming you receive salary above the LEL NI threshold (£5668) from your perm. job within the tax year then you might as well not bother with salary from YourCo. If there are no other benefits then it saves from needing to register the company for PAYE, which in turn means you probably won't be asked to file a personal tax self assessment.

Realistically your employer might only get suspicious if your tax code changed. Tbh, I wouldn't worry about it. Note that being a director is a matter of public record though.

If there is profit to be distributed (after tax) the company can pay you shareholder dividends without requiring PAYE registration. You must declare the income via a personal tax self assessment and there would be tax to pay if you stray into (or are already in) the higher rate tax band.

You can also claim statutory allowances, e.g. 45p/mile, use of home £4/wk, with no personal tax liability or PAYE registration, and these would be deductible against profits before CT.

To keep things clean I'd suggest you pay all company expenses direct from the company account, not out-of-pocket and claimed back as some people do. Technically on some items (e.g. hotel bills) there is a P11D (PAYE) requirement to declare, no matter how the expense is paid, but I'd suggest that as long as these are genuine business expenses and paid for directly then you are low enough below the radar for it to matter, IMHO, IANAA, etc.

[Martin at NixonWilliams]

There's no need to withdraw anything from the company if you don't want to.

If you are not paying a salary there's no need to register for PAYE either, this will save you having to make an RTI submission each week/month. Likewise, there is no requirement to register for VAT until your turnover exceeds £79,000 pa, though it may be in your interests to register depending on your circumstances.

I hope this helps.

Martin

[ASB]

Given there is an element of "secrecy" and a self admitted possible conflict of interests you might be as well to ensure you are not in breach of your contract of employment.

If it is the case this is potentially going to have comeback through disciplinary action etc should the employer discover what is going on.

[Martin at NixonWilliams]

ASB makes a good point - I'm not sure if you are a director in your permanent position, but it is common for directors to have clauses in their contract preventing them from being directors elsewhere.

[DirtyDog]

There's no need to withdraw anything from the company if you don't want to.

If you are not paying a salary there's no need to register for PAYE either, this will save you having to make an RTI submission each week/month. Likewise, there is no requirement to register for VAT until your turnover exceeds £79,000 pa, though it may be in your interests to register depending on your circumstances.

I hope this helps.

Martin

Would you not need PAYE to do a P11D to be able to reclaim expenses?