Bye Bye to Brolly??

[Shimano105]

Jeez you lot are so up your own arses aren't you?

BTW, personal insults do not mean that you have won the argument, quite the reverse.

[NotAllThere]

Or blindly follow the herd ...Ltd Co runners - strangely pompous, insulting and defensive when someone offers an opinion outside of their herd mentality. Can't handle being challenged. ... Nah, not heard anything here that would convince me otherwise that Ltd cos are just a way of massaging sad IT egos into thinking that they have 'Company Director' status. ...No, you are falling into the contractor vanity trap of being a 'Director' - I'll bet you have all your VAT reg and Incorporation certs all over your wall as well .. Now please don't tell me that you fell for the brass door plaque trick for IR35 avoidance as well.. did you?...jeez you lot are so up your own arses aren't you? ... BTW, personal insults do not mean that you have won the argument, quite the reverse.

Said Shimano, after making many personal insults.

[malvolio]

There is an elephant-in-the-room sense of unreality about most of these discussions. People talk of the advantage of going Ltd, and of being outside IR35. This is monumentally imprecise: what they are really talking about is, plain and simple, receiving some of their income without paying NICs on it.

It is indeed not much effort to run a Ltd Co, though it is some effort and expense. But it does not in itself save you very much. The only thing that will save you much money is diverting a substantial part of your income away from being treated as earned income.

Oh God, you haven't been running that arugment in another place recetnly have you?

You run a (very!) small business and are paid a fee That fee covers at least 10 things that an employee gets for free, including social benefits that NICs are (theoretically at least...) meant to cover. So why is using a portion of your income to provide those benefits a bad thing?

Forget IR35, you are under no obligation to pay any more tax than is legally necessary by applying the existing laws correctly. All this guff about "saving NICs" is horsefeathers: the NICs aren't due in the first place.

[NotAllThere]

To be fair - it's saving NICs over being a PAYE employee of a brolly.

[malvolio]

To be fair - it's saving NICs over being a PAYE employee of a brolly.

No no no! Let's at least get the logic right, FFS... How can you save something that isn't due?

NICs are owed if you're an employee and are paid a salary. If you haven't earned any qualifying income - say by getting paid partially in the form of a dividend or free coal or something - you don't owe them.

Taxes are not due if your income doesn't come into their scope. If they're not owed, why should HMRC expect to get them anyway?

[Shimano105]

Clear as mud. Even the advocates can't agree on this tulip.

[mace]

National Insurance Contributions

No no no! Let's at least get the logic right, FFS... How can you save something that isn't due?

NICs are owed if you're an employee and are paid a salary. If you haven't earned any qualifying income - say by getting paid partially in the form of a dividend or free coal or something - you don't owe them.

Taxes are not due if your income doesn't come into their scope. If they're not owed, why should HMRC expect to get them anyway?

There is a basic amount of NIC which everybody should pay to ensure that they get Jobseeker's allowance and, more importantly, a full state pension when they retire. With a Ltd company you can avoid paying a huge amount of NICs by paying yourself dividends or retaining profits in your company and then using a tax effective method of distributing the retained profits when you close the company. As a PAYE employee, you can contribute a large amount of your money to a pension (worth it only if you're a 40% taxpayer). From a moral stance, everybody earning the same income level should pay the same level of tax, but the tax and benefits system wasn't set up or administered by moral people, unfortunately, nor is the law compatible with justice.

[malvolio]

There is a basic amount of NIC which everybody should pay to ensure that they get Jobseeker's allowance and, more importantly, a full state pension when they retire. With a Ltd company you can avoid paying a huge amount of NICs by paying yourself dividends or retaining profits in your company and then using a tax effective method of distributing the retained profits when you close the company. As a PAYE employee, you can contribute a large amount of your money to a pension (worth it only if you're a 40% taxpayer). From a moral stance, everybody earning the same income level should pay the same level of tax, but the tax and benefits system wasn't set up or administered by moral people, unfortunately, nor is the law compatible with justice.

A moral imperative to pay taxes that aren't owed... "Well well" said Cutie, "We won't argue" (Asimov, I Robot)

[CiderEagle]

Thanks for the advice. I wasn't expecting to still be on contract which is why I used a brolly to start with. Now it seems that I'm going to be doing this for a while. I can't see any reason to leave current client. It's a good place to be in the current downturn.
I'll check my IR35 status & get a good accountant. Who's good at doing the IR35 thing?

We use SJD to check every new contract is IR35 proof. £125 well spent IMHO.

[NotAllThere]

No no no! Let's at least get the logic right, FFS... How can you save something that isn't due? ...

Oh go and read a dictionary!

If you go through a brolly your personal net income will be lower than if you go ltd. The difference in personal net income is the "saving" that you make by going ltd.

An acceptable use of the word "saving", I feel. Backed up by the OED.