New Contractor Help

[Cirrus]

Yes you can do this but be aware of what insolvency means and the fact that it's illegal to trade if you are. Running a loss legally implies money being available, either as retained profit from a previous year or additional capital.

kwaboy just wants to juggle cashflows. If he was buying vast quantities of stuff on tick with no realistic hope of being able to pay for it eventually, then that is naughty. But contractors don't normally get into those situations. kwaboy is going to be borrowing from himself or the bank etc - everyday behaviour.

It's important to appreciate that your company structure is a big buffer that allows cash to roll in and out with only a loose relationship to invoices coming in, payments to directors, dividends etc. There are some constraints eg you can't provision pension payments (ie pay them after the end of the relevant tax period) but the main focus is building a snapshot at the point of submitting annual accounts. If the Revenue ever investigated you they may penalise you by recalculating your tax based on actual timings but normal people accept such risks.

[Lance]

You can pay yourself what you like. You don't need to 'crowbar' anything or fiddle with delaying expenses. If you're thinking you can only pay yourself with money the company has earned then you need to realise lots of businesses make losses. You're just not allowed to persistently make a loss. So pay yourself up to your tax optimised limit. It will come off your Corporation Tax so you probably can carry the loss forward to reduce next year's CT

Yes you can do this but be aware of what insolvency means and the fact that it's illegal to trade if you are. Running a loss legally implies money being available, either as retained profit from a previous year or additional capital.

[Cirrus]

I've added my wife who doesnt work as a director. Can I just pay her dividends as shes a shareholder and director, can I also use her personal tax allowance to pay her salary if she does some work

I don't do this but I would say you probably can although you take a risk, but that's a true of non-IR35 contracting as a whole

Does salary have to be taken monthly or can as long as i pay myself £8060 over a year that my nat ins wont be hit

You can pay yourself as you like, It's not 'salary'; it's taxable income.

Can i stall paying expenses back till next tax year for self ass so i can utilise my tax allowance and pay less salary next year and pay myself back in expenses

I am coming to the end of the year, and as Ive just started trading and been out of work am will be know where near my tax threshold so whats the best way of utulising this? Am I able to crowbar any further payments in this years self assessment instead of next year,

.
You can pay yourself what you like. You don't need to 'crowbar' anything or fiddle with delaying expenses. If you're thinking you can only pay yourself with money the company has earned then you need to realise lots of businesses make losses. You're just not allowed to persistently make a loss. So pay yourself up to your tax optimised limit. It will come off your Corporation Tax so you probably can carry the loss forward to reduce next year's CT

[northernladuk]

^^ this. If you listen to no other advice, at least listen to this.

Technically NONE of the company's money is his until its distributed properly?

[ladymuck]

Remember, the VAT money you take in is NOT YOURS. The proportion of your income which has to be paid in Corporation Tax is NOT YOURS. Do not be tempted to dip into it. A good rule of thumb is to put 33% of payments from your agent into a savings account and do not touch it other than to pay your VAT and Corp Tax bills.

^^ this. If you listen to no other advice, at least listen to this.

[chopper]

I've added my wife who doesnt work as a director. Can I just pay her dividends as shes a shareholder and director, can I also use her personal tax allowance to pay her salary if she does some work

It depends.

Does salary have to be taken monthly or can as long as i pay myself £8060 over a year that my nat ins wont be hit

It depends.

Can i stall paying expenses back till next tax year for self ass so i can utilise my tax allowance and pay less salary next year and pay myself back in expenses

It depends.

I intend getting a car on lease, can i claim for mileage and then lease costs and also claim back vat for mileage and petrol

Sounds like you want the business to lease a car for you AND pay you 45p per mile. You can't do this. 45p per mile is what you [strike]can[/strike] may be able to claim if using your personal car. Leasing a car through a contractor kind of business rarely works out well due to Benefit in Kind rules.

How are dividends calculated in relation to my earnings for self assessment, I presume its just how much dividends I give myself from april to april I presume

Yes, April to April.

I am coming to the end of the year, and as Ive just started trading and been out of work am will be know where near my tax threshold so whats the best way of utulising this? Am I able to crowbar any further payments in this years self assessment instead of next year, not looking to do anything dodgy ha ha.

£4 a week for Use of home as an office.
£243 a month childcare vouchers.

Assuming you are outside of IR35, once you have earned more than £8060 (or £11000, it depends) in taxable earnings (e.g. salary from YourCo, salary from previous jobs, any taxable benefits) then just withdraw anything else in dividends. First £5000 is tax free, 7.5% on the rest (until you go over £43000 total earnings, when it becomes 27.5%). After £50,000 you have to start repaying child benefits.

Remember, the VAT money you take in is NOT YOURS. The proportion of your income which has to be paid in Corporation Tax is NOT YOURS. Do not be tempted to dip into it. A good rule of thumb is to put 33% of payments from your agent into a savings account and do not touch it other than to pay your VAT and Corp Tax bills.

Much of the suggestions here assume you are not Public Sector or otherwise caught by IR35, in which case no expenses, pay full rate tax like a permie on everything. Pay child benefits back, only get lower rate childcare vouchers, no Use of Home As An Office allowance, no tax relief on company cars.

Strongly recommend that the first thing you do in the morning is call a contractor friendly accountant and start paying them some money sharpish (should be £100 a month, give or take), otherwise you'll quickly find yourself in a bloomin' mess. Trying to comply and understand without paid for professional assistance is not to be taken lightly, and could end up with you earning nothing whilst detailed at Her Maj's pleasure, with your four kids making weekly visits.


Oh... And don't be tempted by schemes which let you keep 'too good to be true' proportions of your take home. HMRC will get you, and it wont be pretty.

[LondonManc]

Careful you don't morph into NLUK ...

Valid point however.

I still have a soul as far as I'm aware but thanks for the warning.

[kaiser78]

This. You're a business now, start behaving like one.

Careful you don't morph into NLUK ...

Valid point however.

[LondonManc]

Quite a bit to cover in your questions, recommend taking a quick look at the first timers section:-

First Timers Guide - for IT Contractors :: Contractor UK

Also, speak to an accountant for a tailored solution, there's a few of us on here and within the sticky at the top of this forum.

This. You're a business now, start behaving like one.

[VillageContractor]

Quite a bit to cover in your questions, recommend taking a quick look at the first timers section:-

First Timers Guide - for IT Contractors :: Contractor UK

Also, speak to an accountant for a tailored solution, there's a few of us on here and within the sticky at the top of this forum.

Do this

[vadhert]

Get an accountant before everything implodes fast pal.

[northernladuk]

Wow. Accounting by free forum. Not the best idea really. To get someone to tell you all that for free us pushing it.

Get yourself an accountant and do it quickly. Adding your wife as a director and not having a clue what to do next could be very costly for you. There is an accountant recommendation sticky so just pick one of them of there. If you go for your own just make sure its a Free agent one.

[Darren at Fox-Bartfield]

Newbie

Quite a bit to cover in your questions, recommend taking a quick look at the first timers section:-

First Timers Guide - for IT Contractors :: Contractor UK

Also, speak to an accountant for a tailored solution, there's a few of us on here and within the sticky at the top of this forum.

[kwaboy]

Hope its ok to post such a diverse list of questions, I hope people can help with 1 or more of what Im asking


I've added my wife who doesnt work as a director. Can I just pay her dividends as shes a shareholder and director, can I also use her personal tax allowance to pay her salary if she does some work

Does salary have to be taken monthly or can as long as i pay myself £8060 over a year that my nat ins wont be hit

Can i stall paying expenses back till next tax year for self ass so i can utilise my tax allowance and pay less salary next year and pay myself back in expenses

I intend getting a car on lease, can i claim for mileage and then lease costs and also claim back vat for mileage and petrol

How are dividends calculated in relation to my earnings for self assessment, I presume its just how much dividends I give myself from april to april I presume

I am coming to the end of the year, and as Ive just started trading and been out of work am will be know where near my tax threshold so whats the best way of utulising this? Am I able to crowbar any further payments in this years self assessment instead of next year, not looking to do anything dodgy ha ha.

I have 4 children and therefore receive child tax credits and this year I have earnt so little that It wont affect how much im entitled to this year, however going forward how do I deal with this as im not going to know my full earnings till the year after then I may get stung

Thanks in advance