86% Take Home Pay (Totally Legit)

[CryingSheep]

Thanks for the replies.

Okay, technically you are right about the £30K, tax on VAT and pension (10K of which would not offset corporation tax) but this would be the personal tax return of the hypothetical person. Pension is deferred income but I know it's cheating. I wouldn't for one minute claim to be a salesman.

Agent insists the contract is outside IR35 and client says so too although that's not official so I would get an IR35 contract review done.

Manic, your avatar gif is very non PC in this day and age of mental health awareness. However, I do like kittens.

Is the contract running after March19!? Is the client a small company? If the answer is Yes and No, the client definitely needs to make an official determination!

[Lance]

Lance,

Rest assured the settlement agreement was pored over by employment solicitors. Left by "mutual consent" can mean whatever you like...

Correction: that's "mutual termination".

And for clarification the £30K and £10K pension would be processed as PAYE without tax.

not sure how they can process as PAYE without deducting tax. You sure about that?
If it's not redundancy pay, no matter how you get it, tax is owed as income. If not taxed at source you should put it on your SATR.

And your employer's employment solicitors don't give a flying fig about your tax liability.

[Amanensia]

not sure how they can process as PAYE without deducting tax. You sure about that?
If it's not redundancy pay, no matter how you get it, tax is owed as income. If not taxed at source you should put it on your SATR.

And your employer's employment solicitors don't give a flying fig about your tax liability.

Theoretically, if the £30k is a payment that is neither contractually required nor customarily given, it could qualify as an ex gratia payment - effectively a gift. This is how cricketers and footballers used to get tax-free income from "benefit" matches, although I don't think the £30k limit even applied in those days. Ex gratia payments up to £30k aren't taxable. Redundancy payments are one example of an ex gratia payment but ex gratia payments don't have to be redundancy payments.

[ContrataxLtd]

not sure how they can process as PAYE without deducting tax. You sure about that?
If it's not redundancy pay, no matter how you get it, tax is owed as income. If not taxed at source you should put it on your SATR.

And your employer's employment solicitors don't give a flying fig about your tax liability.

You can still receive up to £30k tax free under a compromise agreement, it doesn't have to be in relation to redundancy. Yes it is harder than it use to be with more items definitely subject to tax but it is still possible because it is compensation not earnings provided it is ex gratia (non-contractual).

Martin
Contratax Ltd

[Lance]

You can still receive up to £30k tax free under a compromise agreement, it doesn't have to be in relation to redundancy. Yes it is harder than it use to be with more items definitely subject to tax but it is still possible because it is compensation not earnings provided it is ex gratia (non-contractual).

Martin
Contratax Ltd

OK. Cool. Wasn't aware of that.
At risk of going slightly off-topic. What's to stop my company making an ex-gratia payment to me? I'm pretty sure it won't be allowed but by what mechanism is this done?

[moneybags]

Thank you all

CryingSheep I am pushing to get determination but it's a big company. The agent says they determine status on a individual contractor basis. It's very much project by project work rather than a bums on seats role. There are only a handful of people I know who could fill in for me and I'm currently tapping them up. I'm hoping to work for multiple clients next year at the same time. That doesn't mean I'm 100% confident the contract won't get flipped but as I've not actually started yet there is time in play to get clarification and legal advice.

Lance, my terminology is not quite right here, the 30K comes off as a deduction before taxable pay (like pension).

[ContrataxLtd]

OK. Cool. Wasn't aware of that.
At risk of going slightly off-topic. What's to stop my company making an ex-gratia payment to me? I'm pretty sure it won't be allowed but by what mechanism is this done?

You are right, it's not possible in my opinion. First off you would need a written contract of employment in place between you and your LTD (paying at least National Minimum Wage etc.) and secondly, you, as the employee, can't voluntarily resign. If yo,u as the director, choose to close the company then you have effectively made the decision to resign as employee so therefore don't qualify. Trying to simply a little but you get the idea.

Martin
Contratax Ltd

[WTFH]

Thank you all

CryingSheep I am pushing to get determination but it's a big company. The agent says they determine status on a individual contractor basis. It's very much project by project work rather than a bums on seats role. There are only a handful of people I know who could fill in for me and I'm currently tapping them up. I'm hoping to work for multiple clients next year at the same time. That doesn't mean I'm 100% confident the contract won't get flipped but as I've not actually started yet there is time in play to get clarification and legal advice.

Lance, my terminology is not quite right here, the 30K comes off as a deduction before taxable pay (like pension).

Have you signed the contract yet?

[moneybags]

I'm trying to sort out most of the paperwork today CryingSheep but Larsen Howie are not going to be able to get back to me on their IR35 review until next week.

The contract has a 1 week notice opt out clause before work commences in any case.

[WTFH]

Moved to General.

The other parts of the forum are for serious discussion. People may read this thread and think it's genuine.