Just been offered a contract "inside IR35"...

[Bluebird]

I want to keep my LTD company, but wanted to ask the following....

1. Does the end-client deduct the PAYE etc or do they pay the full rate + VAT to Umbrella and they then do the deductions?
2. Once deductions are made, then whatever is left ( deemed payment? ) is paid to the Company?
3. Once th company has the money - it can distribute as it sees fit? - Currently the company has two shareholders ( myself and Mrs Bluebird ) - can I make equal payments to each - or does it all have to come to me as I'm the "fee earner?"

The end client wants to use an intermeadite company rather than pay my LTD direct - presume this is normal?

Thanks for any help - I did read some of the stickeys but this scenario didn't seem to be there!

[eek]

You are asking 2 different things and are getting confused.

If you use an umbrella firm the agency / end client pays full rate to the umbrella and the umbrella firm deducts their costs (fee, apprenticeship levy and employer NI) then pays the rest via PAYE to you directly.

Deemed payments are a nightmare so most agencies avoid them if at all possible - but if they were being done your limited company would receive your PAYE salary after all deductions and should then forward 100% of it to you. - Note that in this scenario all your money has both lots of NI deducted before you receive it making pension contributions very expensive.

Basically it doesn't work the way you think it does, few agencies will be willing to do what you want and it isn't very efficient.

My advice would be to take the contract via an umbrella, maximise your pension contributions and ensure your next contract was outside IR35.

As for which umbrella to pick, the forum usually recommends Clarity so give Lucy a call.

[northernladuk]

Why do you want to keep your LTD when you aren't sure how it works? Surely you want to see how it works and then pick the best way to run the situation, not force your LTD in to a situation where it isn't the best option.

I think to date I've only seen two posts since this all started where someone is using a LTD. Do you have an offer? Using a LTD won't even be allowed in a majorty of situations.

[Bluebird]

Why do you want to keep your LTD when you aren't sure how it works? Surely you want to see how it works and then pick the best way to run the situation, not force your LTD in to a situation where it isn't the best option.

I think to date I've only seen two posts since this all started where someone is using a LTD. Do you have an offer? Using a LTD won't even be allowed in a majorty of situations.

I would prefer to keep the Ltd Co ticking along ( yes I don't really know how it works - hence the question! ) - I did some research and it seemed to point to the umbrella doing all the PAYE and then making a payment to My Ltd Co - but I wasn't sure.

For other reasons ( not tax ) I'd like the payment that comes into my Ltd Co to then get distributed equally between me and my wife.

[Bluebird]

You are asking 2 different things and are getting confused.

If you use an umbrella firm the agency / end client pays full rate to the umbrella and the umbrella firm deducts their costs (fee, apprenticeship levy and employer NI) then pays the rest via PAYE to you directly.

Deemed payments are a nightmare so most agencies avoid them if at all possible - but if they were being done your limited company would receive your PAYE salary after all deductions and should then forward 100% of it to you. - Note that in this scenario all your money has both lots of NI deducted before you receive it making pension contributions very expensive.

Basically it doesn't work the way you think it does, few agencies will be willing to do what you want and it isn't very efficient.

My advice would be to take the contract via an umbrella, maximise your pension contributions and ensure your next contract was outside IR35.

As for which umbrella to pick, the forum usually recommends Clarity so give Lucy a call.

You're right I am getting two things confused - I assumed that the payment the agency/umbrella makes post-PAYE was called the deemed payment!

Thanks for putting me straight.

[eek]

I would prefer to keep the Ltd Co ticking along ( yes I don't really know how it works - hence the question! ) - I did some research and it seemed to point to the umbrella doing all the PAYE and then making a payment to My Ltd Co - but I wasn't sure.

For other reasons ( not tax ) I'd like the payment that comes into my Ltd Co to then get distributed equally between me and my wife.

No umbrella (I or anyone else sane would trust) is going to pay a third party rather than the person they employ and as the umbrella firm acts as your employer because that is how things work.

You can prefer all you want but you simply can't do what you want because that isn't how the world works.

[WTFH]

Once you've received your salary direct from the umbrella, just have a joint bank account with your wife. That solves your problem. (Since you're not going to tell us what the "other reasons" are)

[JHamp82]

I want to keep my LTD company, but wanted to ask the following....

1. Does the end-client deduct the PAYE etc or do they pay the full rate + VAT to Umbrella and they then do the deductions?
2. Once deductions are made, then whatever is left ( deemed payment? ) is paid to the Company?
3. Once th company has the money - it can distribute as it sees fit? - Currently the company has two shareholders ( myself and Mrs Bluebird ) - can I make equal payments to each - or does it all have to come to me as I'm the "fee earner?"

The end client wants to use an intermeadite company rather than pay my LTD direct - presume this is normal?

Thanks for any help - I did read some of the stickeys but this scenario didn't seem to be there!

Like others have said you are mixing two different things. Getting paid by Umbrella and Ltd company are two different things. Umbrella will deduct appropriate taxes, NI and their commission before making a payment to you in your personal account. Nothing to do with the Limited company.

If you want to keep your Ltd company open then that's completely separate but it may be better to keep the company dormant assuming there is no activity.

Thanks.

[northernladuk]

I think you've looked for the answer you want to hear rather than researching what the best method is. Being stuck on paying your wife has also skewed reality. I seem to remember lots of articles saying it is possible but none that recommend it. For example I googled inside IR35 pay options and the very first result is.

https://jsagroup.co.uk/your-payment-...aught-by-ir35/

Which says

“Deemed” Employment through Your PSC


Occasionally, you can continue operating through your PSC even when you’re ‘inside’ IR35, taking “deemed” employment payments. Although this may be suitable if you’re working on more than one contract or you’ve taken a very short-term role, in most circumstances, there are no benefits to working this way. You will still be taxed the same amount as if you were working through an Umbrella company or PAYE structure, however, you will have none of the employment benefits of Umbrella employment and none of the tax freedoms of PSC working.

There is also a link to another page about using PSC which also says 'However, it’s important to understand how this works and what it means for you, as continuing to work through your PSC when you’re caught by IR35 is only beneficial in very limited circumstances'

None of the rest of the links it brings up comes even close to suggesting staying with the LTD is a good idea. Absolutely none of them talk about being paid via a brolly and then the payment going to the LTD. That doesn't even make sense.

They all talk about what you can do with the LTD in the meantime to keep it 'ticking over' so no idea what you've been researching to come to your conclusions.,

I assumed that the payment the agency/umbrella makes post-PAYE was called the deemed payment!

I thought you said you'd researched it?

Fancy telling us why you want to pay your wife half? Just giving us half a story that doesn't appear to make sense doesn't help us.

[Paralytic]

Fancy telling us why you want to pay your wife half? Just giving us half a story that doesn't appear to make sense doesn't help us.

I'm guessing divorce/separation settlement.