Two Person Ltd - one half mainly focused on public sector - one not

[Wonky]

Having completed a little digging around I'm pretty sure the answer will be that no one has a bloody clue yet but I'll throw it out there for thoughts and options anyway...

I've got 50% of a Ltd company with 2 employees. The company provides a mix of PM, IT and FS consultancy. Both people pull in roughly equivalent revenue into company so it's not a "adding the wife to the shareholders" type thing.

One half mainly focuses on the public sector and is likely to be swept up in the IR35 changes come April.

What I'm struggling to understand is the following...

1) How will the Public Sector 'person' be paid post April 2017. All other things being equal there would be a strong wish to remain under a Ltd company and not move to an umbrella.
2) Implications for corporation tax under the Ltd company
3) Any implications for revenue brought into the company for engagement outside IR35
4) Anything else we need to consider?


Cheers

[northernladuk]

Erm. Surely you'll pay them as you already do as they are already employees?

Or am I missing something? 50% is you and 2 employees? Where is the other 50%?
Do these 'employees' have a contract of employment? PAYE, pension employment rights etc?

[Andy Hallett]

...

1) How will the Public Sector 'person' be paid post April 2017. All other things being equal there would be a strong wish to remain under a Ltd company and not move to an umbrella.

The agency will deduct PAYE and NIC's based on that persons tax code

2) Implications for corporation tax under the Ltd company

You will still pay corporation tax on any profits

3) Any implications for revenue brought into the company for engagement outside IR35

I wouldn't have thought so

4) Anything else we need to consider?

Your PSC that may well have been operating outside up until now, due to your determination, may be a bit a of a target if it pops inside IR35 doing same or similar gig?

[Wonky]

Erm. Surely you'll pay them as you already do as they are already employees?

Or am I missing something? 50% is you and 2 employees? Where is the other 50%?
Do these 'employees' have a contract of employment? PAYE, pension employment rights etc?

Sorry I should have been more specific. It's just me and my partner who are the employees/owners. So two people 50% each.

As things stand all revenue goes into the Ltd and we each draw divs and a salary as appropriate.

No contract with the ltd given the nature of the set up, PAYE yes, pension via the ltd (and rights under auto enrolment) yes.

[northernladuk]

Sorry I should have been more specific. It's just me and my partner who are the employees/owners. So two people 50% each.

As things stand all revenue goes into the Ltd and we each draw divs and a salary as appropriate.

No contract with the ltd given the nature of the set up, PAYE yes, pension via the ltd (and rights under auto enrolment) yes.

If you are both directors then neither of you are employees

[Wonky]

If you are both directors then neither of you are employees

I stand chastised and suitably facepalmed. I'd expect nothing less.

Getting back to my original query i'm still unsure.

Trying to get my head around how best an agency will add me to their payroll when in effect they will be paying an invoice. How this reconciles with my Ltd payroll if the money goes across the Ltd books.

I'm assuming.......

• They will just pay me personally & direct so I lose the ability to warchest funds up in the LTD and disperse in a more tax efficient manner over time.
• Pension payments will need to be made by me personally after tax and then clawed back each tax year?

[b r]

Same for us, OH is contracting in the Public Sector while I'm contracting in the Private Sector.

My assumption is her invoice is paid net of tax/NI, if she's still there in April, but WE can pay salary, divi's, expenses however we want - or am I wrong?

[Dylan]

If you are both directors then neither of you are employees

Employment status: director and shareholder was an employee | Personnel Today

[northernladuk]

Employment status: director and shareholder was an employee | Personnel Today

But surely in the third or so paragraph..

It is an established principle that directors are not automatically employees,

[Dylan]

But surely in the third or so paragraph..

It is an established principle that directors are not automatically employees,

Followed by the conclusion that it isn't necessarily true.