mortgage advice

[jamesbrown]

OK thanks a lot for the advice, will get a review done.

You should do this, but make sure you don't simply have your contract reviewed without explaining the scenario and working practices carefully to the reviewer. It's highly likely, based on what you've described, that you will be operating inside IR35 on this contract, so I'd be surprised if the advice came back to the contrary, and it's ultimately the working practices that matter.

I agree with the comments above about retaining the Ltd (even though that might not have been the decision you'd take now) and securing an accountant that's familiar with contracting and IR35. You'll need to operate what's known as a "deemed payment", whereby 95% of the income on that contract is subject to ordinary payroll taxes and the remaining 5% is allowed for expenses (or dividends), regardless of the actual expenses incurred. If you're on the VAT FRS, that income also counts in the deemed payment.

[Elliebank]

Yeah, your pay will go up a lot!!!!

Why, after reading your personal situation, did you decide to take on contract work? What will you do when your 'employer' uses the fact you have zero rights and no notice period to bin you off and you can't travel so end up for 2 to 12 months on the bench?



But don't kid yourself. You say


Which would further lead to think that the contract is a sham just for you to carry on. The contract should reflect working practices, not meet guidelines. HMRC only have to chat to your employer and your contract defence will just fall around your ears. Reviews will not always give a true representation if they do not fully know all the facts and everyone in the loops is playing the game.

Don't consider getting a new accountant if your old one didn't bring this up. You must get one.

I would also suggest you don't dismiss the umbrella option too quickly. TCP is correct a LTD can still work slightly in your favour but it comes with responsibilities. An umbrella will be much simpler and not have the same level of responsibility. You mentioned your take home pay will change. I read in to this you don't fully understand how you are remunerated from an LTD.

You make a lot of presumptions. I handed my notice in to become a contractor as I have done it before (before I had children), I know there is a lot of work available and I am good at my job and was never out of work when previously a contractor. I lined a contract up with a competititor of my employers. When I handed my notice in to go contracting they tried increasing my salary to entice me to stay which I refused. Then, as they already work with a number of contractors they offered to take me on as a contractor on a better hourly rate than the one I had lined up and therefore I agreed to that. They have a different standard contract for contractors than their perm staff (obviously) and when I brought up IR35 HR simply pointed out the points of the contract that inland revenue would look at and the differences between a perm contract, just to help me out as I didnt fully understand IR35. There is no sham at all and if I was to lose the contract I am confident I would get another one elsewhere. Although obviously I realise that I could still be caught in IR35 as I was a previous employee.

Not sure where I said I can't travel? I can.

FYI as I'm sure something is going to be said about this, I was paid through an umbrella company when I was previously a contractor as when I started as a contractor the first time I never even knew I could do it as a ltd co, and only learnt about it thru other contractors when I was working with them.

With regards to take home pay, I'm not talking about what I pay myself each week (salary and dividends) I'm talking about that and what is left in my business account once I pay my corporation tax. The overall amount will be more than if I pay myself a normal salary as PAYE. And if I still haven't 'got it' then shoot me down. Advice would be preferred rather than criticism.

[mudskipper]

With regards to take home pay, I'm not talking about what I pay myself each week (salary and dividends) I'm talking about that and what is left in my business account once I pay my corporation tax. The overall amount will be more than if I pay myself a normal salary as PAYE. And if I still haven't 'got it' then shoot me down. Advice would be preferred rather than criticism.

If you're inside IR35, then you shouldn't have corp tax which is on the profit of your business - you won't be making 'profit'. Basically you take everything as salary (less expenses).