Yeah, I agree.
It isn't going to absolutely put you inside IR35, but you have to be careful.
But I don't understand what you said anyway. Fear of IR35 is not a reason to avoid this.
You said about a day a week, I think. So let's use £500 / day for purposes of discussion. That's £2K a month. You get to exempt 5% of that from the IR35 tax hit, so that takes it down to £1.9K.
Presumably, you are paying yourself £700 / month salary. I hope you are putting something like £500 a month, or more, into a pension. (If it were me I'd be doing £1200 a month, which with the salary would completely wipe out the £1900 and render IR35 moot). But let's use £500.
So you have £1200 of the £1900 is being paid out in salary/pension. That means IR35 only matters for £700. If you weren't inside IR35 you'd be paying about 25% of that in tax (Corporation Tax plus dividend tax). That's £175. Inside IR35 you'll pay what, 45%? So that's an extra £140 / month because you are inside IR35.
The business benefits of a retainer structure are, to me, easily worth a little extra tax. A contractual arrangement is almost certainly going to last longer and have more regular income than something ad hoc. Don't let IR35 keep you from building your business. It's a stupid law that may end up costing you more tax if you do what makes business sense, but the amounts here are negligible. Decide what makes business sense and do it, and let your accountant make sure the tax situation is straight.
It isn't going to absolutely put you inside IR35, but you have to be careful.
But I don't understand what you said anyway. Fear of IR35 is not a reason to avoid this.
You said about a day a week, I think. So let's use £500 / day for purposes of discussion. That's £2K a month. You get to exempt 5% of that from the IR35 tax hit, so that takes it down to £1.9K.
Presumably, you are paying yourself £700 / month salary. I hope you are putting something like £500 a month, or more, into a pension. (If it were me I'd be doing £1200 a month, which with the salary would completely wipe out the £1900 and render IR35 moot). But let's use £500.
So you have £1200 of the £1900 is being paid out in salary/pension. That means IR35 only matters for £700. If you weren't inside IR35 you'd be paying about 25% of that in tax (Corporation Tax plus dividend tax). That's £175. Inside IR35 you'll pay what, 45%? So that's an extra £140 / month because you are inside IR35.
The business benefits of a retainer structure are, to me, easily worth a little extra tax. A contractual arrangement is almost certainly going to last longer and have more regular income than something ad hoc. Don't let IR35 keep you from building your business. It's a stupid law that may end up costing you more tax if you do what makes business sense, but the amounts here are negligible. Decide what makes business sense and do it, and let your accountant make sure the tax situation is straight.
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