Ltd Company PAYE question

[VectraMan]

Are you saying that as IR35 is on contract basis you could on one contract be paying full TAX and NI and then on the next contract taking home min sal and big divs. How would that work out in terms of recording it on accounts and assume you have to tell the accountant that the reason you have only taken divs for that certain period is because your contract is out of IR35

There'd be no point paying min salary on the second contract as you've already paid a much larger salary on the first contract. You'd just pay dividends.

If you are inside IR35, you don't even have to pay the full amount as salary, but you have to pay the tax as if you had. You could be using that money to fund some other business activity, yet you'll be taxed on money you've never earned. Good isn't it?

[Euro-commuter]

Are you saying that as IR35 is on contract basis you could on one contract be paying full TAX and NI and then on the next contract taking home min sal and big divs. How would that work out in terms of recording it on accounts and assume you have to tell the accountant that the reason you have only taken divs for that certain period is because your contract is out of IR35

What do you mean by mostly dead ?

If your accountant is doing the accounts for a Ltd Co, he does not in general need to know anything about what one of the Co employees (you) did during periods of employment by other companies. Furthermore, the fact that you are employed by some other company at a particular moment does not stop you from receiving dividends from any company of which you are a shareholder, including a company that you own. It is only as a shareholder that you can receive dividends: it doesn't matter where you're employed at the time.

If the contract that you personally are currently on is caught by IR35, the company you have shares in can still pay you the shareholder dividends from the profit that it has made on non-IR35 contracts.

If I were HMRC I'd take you for a disguised employee: you do not seem to have any idea of the difference between employee and company, or employee, director, and shareholder. You are possibly caught by IR35, the Co is not. But it can only pay dividends out of profits.

[Ardesco]

Are you saying that as IR35 is on contract basis you could on one contract be paying full TAX and NI and then on the next contract taking home min sal and big divs.

On a contract classified as caught by IR35 you will have to pay the tax man a tax bill that assumes that all the momeny made on that contract has been paid to you through PAYE even if you don't take the momeny out of the company, as you are paying tax as if the money is taken out of the company as PAYE you may as well take it all out of your company as PAYE. The other contract(s) you don't need to pay any tax on unless you take the money out of your company, the amount of tax paid depends on how you take the money out of your company (via PAYE or Dividend).

Bear in mind that at the end of the year you will have to pay corporation tax on all the profit that you company has made, dividends can only be taken from profit (i.e. after corporation tax has been paid)

How would that work out in terms of recording it on accounts and assume you have to tell the accountant that the reason you have only taken divs for that certain period is because your contract is out of IR35

Your accountant will be able to work it out, he/she deals with this sort of thing every day, that is why you pay for his/her services. Just note down what has gone out as PAYE and what has gone out as dividends and tell your accountant which contracts are caught by IR35 and which ones aren't.

What do you mean by mostly dead ?

Very few people who have challenged IR35 ruling have lost, somthing like 2 out of 3000 or something similar. i'm sure Malvolio can supply all the figures and more information if needed.