Fulltime staff to part time distant contracting

[eek]

1- The nature of what I will be doing will be exactly the same as I'm doing now.

2- Thanks. A year would not work for us, 6 months is a maybe.

3- No, we don't know much about IR35. But also I'm not trying to reduce my taxes/NI. I'm happy to pay what I am paying now to HMRC and so is my employer. Only that we want to shift it to contract so I can also do contract for others.

So you will need to ensure the pension + salary payments from your company are the same or greater than what the company is paying you.

Do that and you've got nothing to worry about assuming you can find other outside IR35 work (which following the recent MSC case could be harder as a lot of people are now using it to scare agencies into not offering outside IR35 contracts).

[danyjr]

So you will need to ensure the pension + salary payments from your company are the same or greater than what the company is paying you.

Do that and you've got nothing to worry about assuming you can find other outside IR35 work (which following the recent MSC case could be harder as a lot of people are now using it to scare agencies into not offering outside IR35 contracts).

Thanks eek

Do you know how this would work? This is my understanding:

Falling outside IR35:
The contractor will set up a limited company. This limited company will pay the contractor/director a low salary as well as low NI contribution. The company will then pay corporate tax on net profit. What is left is paid as dividends to the contractor thereby avoiding 'employee' tax rates.

Falling inside IR35:
The contractor will set up a limited company. The limited company will pay the contractor/director the exact amount it has earned as salary, as well as the appropriate NI contribution based on this salary. No corporate tax to be paid on a zero net profit. No dividends left to be paid to the contractor. The contractor will then pay tax/NI on their income.

Looks like I will be double whammy’d with NI and having to pay it twice, once through my limited company’s NI contribution and again NI paid as an employee.

Have I misunderstood something?

[eek]

Thanks eek

Do you know how this would work? This is my understanding:

Falling outside IR35:
The contractor will set up a limited company. This limited company will pay the contractor/director a low salary as well as low NI contribution. The company will then pay corporate tax on net profit. What is left is paid as dividends to the contractor thereby avoiding 'employee' tax rates.

Falling inside IR35:
The contractor will set up a limited company. The limited company will pay the contractor/director the exact amount it has earned as salary, as well as the appropriate NI contribution based on this salary. No corporate tax to be paid on a zero net profit. No dividends left to be paid to the contractor. The contractor will then pay tax/NI on their income.

Looks like I will be double whammy’d with NI and having to pay it twice, once through my limited company’s NI contribution and again NI paid as an employee.

Have I misunderstood something?

Small business exception - assuming it's valid so the Chapter 8 rules of IR35 apply.

Which mean your company invoices your client and they pay you in full. Your company is then responsible for paying the correct amount of tax which for an inside IR35 contract means it either goes into your pension pot or is treated as PAYE income.

What you describe is deemed payments and it screws up pensions which is the reason why you need to use an umbrella when Chapter 10 of IR35 applies.

[northernladuk]

1. Re MoO. Yes the contract does allow me to take on projects from other clients simultaneously. The client may not veto other contracts.

That is not MoO. That might have helped in the old business entity tests but MoO (or lack thereof) is about the current contract with your client.
You are also only guessing when you talk about simultaneously as well. It would depend on the terms of the contract you get.

Re RoS. No. I am the only person who can do this job hence why they want me in the first place due to my knowledge.

So this is personal service and not engaging a third party so has to be inside by default.

Re D&C. No supervision, direction or control over my work. I will also not be moved from task to task, the remit for this contract is very clear.

You said they would tell you what to work on. That's D&C

1- The nature of what I will be doing will be exactly the same as I'm doing now.

So you are doing the same thing but under a different payment vehicle. Slam dunk inside.

2- Thanks. A year would not work for us, 6 months is a maybe.4

Which would indicate you aren't doing it for genuine reasons, but just to get around the tax status so inside.

3- No, we don't know much about IR35. But also I'm not trying to reduce my taxes/NI. I'm happy to pay what I am paying now to HMRC and so is my employer. Only that we want to shift it to contract so I can also do contract for others.

You appear to be arguing it with us very hard to say you don't know much about IR35 (which is very clear).

You can dress it up how you want and change the goal posts, even though you don't appear to understand what they are, but you aren't going to get us to change our minds.

I think it's time to say 'Yeah its OK, go ahead and fill your boots' as you are clearly trying to convince us of something you are going to do anyway as you aren't listening to any advice.

[danyjr]

northernladuk I said in the original post I wasn't trying to reduce my taxes/NI. I'm sorry if it appeared as though I did, but I clearly stated that in the OP.

[danyjr]

Small business exception - assuming it's valid so the Chapter 8 rules of IR35 apply.

Which mean your company invoices your client and they pay you in full. Your company is then responsible for paying the correct amount of tax which for an inside IR35 contract means it either goes into your pension pot or is treated as PAYE income.

What you describe is deemed payments and it screws up pensions which is the reason why you need to use an umbrella when Chapter 10 of IR35 applies.

Thanks eek . Yes, the "client" (the company I'm currently working for) is a small company. I have checked their accounts just to be sure.

It looks like I will have to build in all the benefits/extras (expenses, pension) they are giving me into my monthly invoices. Which they seem to be onboard with.

[pr1]

Treat it as inside IR35 and no problems