Sole Trader Vs Ltd

[dave_m13]

Hi All

Just a question, in your opinions what would be the most tax efficient?

The couple of contracts I have had, I have been contracted direct with the clients, so have opted to be a sole trader rather than go down the ltd company route.

Out of curiosity more than anything would I be better off setting up my own Ltd company.

Thanks
Dave

[ASB]

Hi All

Just a question, in your opinions what would be the most tax efficient?

The couple of contracts I have had, I have been contracted direct with the clients, so have opted to be a sole trader rather than go down the ltd company route.

Out of curiosity more than anything would I be better off setting up my own Ltd company.

Thanks
Dave

Outside IR35 you're better off with a Ltd and paying small salary/dividends. If there is an IR35 risk then you would better off as a sole trader - though in this case any client using you on a sole trader basis is exposing themselves to a real risk of you being their ACTUAL employee.

Of course you need to factor in the running costs for the company which may make the gain pointless depending upon the sums involved.

There is no real possibility of an agency using you on an s/e basis due to the risks related with the above (and some others too).

[dave_m13]

Thanks

The first contract I was def inside IR35 so I went down the self employed route but worked in belgium as a cross boarder worker not as a belgium resident as I travelled back and forth every weekend.

This is my second contract and the contract is good in that it does not state hours to be worked, I have to provide all equipement myself etc. looking at the contract I would say I am outside IR35, rate is Ok and they have no problem me being self employed.

Whether the extra cost of running a Ltd is better than being self employed I am not entirely sure.

[expat]

Thanks

The first contract I was def inside IR35 so I went down the self employed route but worked in belgium as a cross boarder worker not as a belgium resident as I travelled back and forth every weekend.

This is my second contract and the contract is good in that it does not state hours to be worked, I have to provide all equipement myself etc. looking at the contract I would say I am outside IR35, rate is Ok and they have no problem me being self employed.

Whether the extra cost of running a Ltd is better than being self employed I am not entirely sure.

ISTM that if you travel back and forth every weekend then you are not a cross-border worker. A cross-border worker is a precise definition, and IIRC you must live within a certain distance of the border (30km or some such) and commute every day.

Otherwise you're just somebody who chooses to spend his weekends somewhere else.

[Not So Wise]

For you and client LTD is generally always the better way to go, for tax and liability reasons

Hence why most (all?) agencies (and most clients as well) refuse to deal with Sole Traders

Plus it's a lot "cleaner" for your accounts if you have the clearer dividing line between you and your business

[dave_m13]

ISTM that if you travel back and forth every weekend then you are not a cross-border worker. A cross-border worker is a precise definition, and IIRC you must live within a certain distance of the border (30km or some such) and commute every day.

Otherwise you're just somebody who chooses to spend his weekends somewhere else.

This is not the case according to the Belgium police, this was the only way I could get my car onto a secure base with keeping my existing UK number plates.

Due to the fact that I was travelling every weekend and my residence is UK I could not change UK number plates. Usually I would have had to change to belgium plates after 3-6 months cannot remember which but the police had stated that the UK and Belgium have agreement now that will allow you to work as a cross boarder.

So I went to the local town hall to advise them of this, I was taken off being a belgium resident and was changed to cross boarder worker.

[expat]

This is not the case according to the Belgium police, .

I stand corrected.

[dave_m13]

This is sort of a reason why I asked the question.

I may have another contract opportunity but its going through an agency this time and they are asking for rate. Going direct is fine but through an agency, would you include agency fee and VAT in your rate or would your daily rate be seperate to these?

Also what about expenses, would this be charged to agency or would this have to included in the daily rate as well?

Thanks

[tino]

This is sort of a reason why I asked the question.

I may have another contract opportunity but its going through an agency this time and they are asking for rate. Going direct is fine but through an agency, would you include agency fee and VAT in your rate or would your daily rate be seperate to these?

Also what about expenses, would this be charged to agency or would this have to included in the daily rate as well?

Thanks

You give them the rate you would be happy with, adjusting to take into account the expenses policy - don't include VAT

[expat]

This is sort of a reason why I asked the question.

I may have another contract opportunity but its going through an agency this time and they are asking for rate. Going direct is fine but through an agency, would you include agency fee and VAT in your rate or would your daily rate be seperate to these?

Also what about expenses, would this be charged to agency or would this have to included in the daily rate as well?

Thanks

The rate you quote is the money that you expect to get. Agency fee is not your affair. VAT is a legal requirement (if appropriate) so you don't need to advise the agency or the client of tax law, you just add it on.

Expenses are a matter for prior agreement between you and the agency. There is no fixed rule.