Leaving Perm, Starting a Ltd Company - P45?

[BradMcA]

Hi,

I want to be my own boss for as long as I can now, made redundant as a .net developer yesterday but have some immediate client possibilities as a freelancer.

Question is, what do I do with my P45 when I get it once I becoming a director of my new limited company? - and if I find myself going back to Perm work in the future I assume I can remain a director, stop the salary - continue with dividends from my still trading ltd company provided the new perm contract permit?.

[northernladuk]

Get an accountant and ask him. You would close the company down and withdraw the money which is cheaper than divi'ng it. The other option is to stick it in to a pension but there are gotchas to watch out for. Get some professional advice.

[ASB]

"what do I do with my P45 when I get it once I becoming a director of my new limited company?"

Send it to tax office with the relevant form when you register for paye.

"and if I find myself going back to Perm work in the future I assume I can remain a director, stop the salary - continue with dividends from my still trading ltd company provided the new perm contract permit?."

Depends on your perm contract. There is no specific requirement to stop salary. Though its likely to be inefficient; also causes a minor complication in your tax coding because it needs to be allocated toyour main employment. Also the nmw can be an issue if youdecide not to pay a salary. Depends on whether you are an employee or just an officer.

[BradMcA]

Thanks ASB, good pointers

[ASB]

Get an accountant and ask him. You would close the company down and withdraw the money which is cheaper than divi'ng it. The other option is to stick it in to a pension but there are gotchas to watch out for. Get some professional advice.

Why would they choose either of those paths? Sure they are possible, but there is no need to change anything if they dont want to.

[northernladuk]

Why would they choose either of those paths? Sure they are possible, but there is no need to change anything if they dont want to.

And why would he continue to distribute dividends to himself when he is perm employment?

His explanation of his situation is too ambiguous to give a proper answer. He needs to understand the options and how they will apply to him. Only something him and his accountant can work out.

[VectraMan]

Why would they choose either of those paths? Sure they are possible, but there is no need to change anything if they dont want to.

Don't worry. NLUK hasn't read the question.

Yes, best is to stop salary and then you can pay yourself the odd dividend from your still-trading company on top of your permie salary. I've been doing it for a couple of years.

[northernladuk]

Don't worry. NLUK hasn't read the question.

Yes, best is to stop salary and then you can pay yourself the odd dividend from your still-trading company on top of your permie salary. I've been doing it for a couple of years.

I don't think that is the case. The OP is offering an option of continuing to pay. I pointed out he can also shut the company down or pay to pension depending on his circumstances. I read in to the question he isn't aware of the options available. He is a new contractor so just say 'YES' to his question isn't really the best advice is it.

Topping up the perm salary isn't the most efficient way of getting the money out of the company is it?

[ASB]

And why would he continue to distribute dividends to himself when he is perm employment?

His explanation of his situation is too ambiguous to give a proper answer. He needs to understand the options and how they will apply to him. Only something him and his accountant can work out.

In answer to the first question. Perhaps his salary and the additional divis is still under the higher rate threshold. If this is the case it may indeed be the most efficient way overall of getting the funds out.

the cost of winding up formally could well be prohibitive. Equally there may be circumstances where paying a salary and using carry back reliefs could possibly most efficient.

I was merely pointing out that both your suggestipns are entirely possible, but that neither of them are in anyway mandated.

wbat is mlst efficient for circumstances that have not yet actually occired. Who knows. But some combination of a great range of possibilities will become the answer.

[DirtyDog]

You would close the company down and withdraw the money which is cheaper than divi'ng it.

This

The other option is to stick it in to a pension but there are gotchas to watch out for.

Or this.

Yes, best is to stop salary and then you can pay yourself the odd dividend from your still-trading company on top of your permie salary.

Or this.

Get some professional advice.

Definitely this.

"Best" is a subjective term - you'd have to look at your exact situation (in discussion with your professional advisors) and work out what to do.