Inside IR35 and PAYE

[Mordac]

Anyway, here's the lowdown of the positions and from what I've learned in a day about IR35.

Company I used to work for needs me back to do some work for them. They supply me a 1 month rolling notice period and want me to work out of their office every day and they supply the laptop and phone etc. I'm not doing anything their other employees could'nt do, it's just that they're tulip and they need something actually finishing for once.

You're in a strong position to influence your terms here, if they need you that badly. As Mal says, if you were contracted to deliver a piece of work, rather than sit at a desk for a month waiting for them to tell you what to do, you'd be potentially moving yourself outside IR35. One of the things you'll hear a lot on here is that IR35 is a voluntary tax, which seems a bit far-fetched at first, but with a little imagination you really can stop ticking that box and handing over those extra thousands a year. It really is voluntary, you just need to operate in the right way to avoid being caught by it.

[wantacontract]

welcome

welcome and a happy new year!!

[ASB]

I'll keep plugging away, and will try to and avoid stupid posts....

Good luck

Assuming you are IR35 caught - then you don't actually have to pay yourself the deemed salary you just get taxed on it (this at least gives you the opportunity to hold onto the cash for a while). It can also give rise to some possible planning opportyunites whilst arriving at a decision re caught/not.

Also, depending upon your personal situation company contributions into a pension may make sense, they are one of the few allowable expenses - but care needs to be taken with contributions > 100% of salary.

There has been quite a lot of discussion about the implications of this, might be worth a search.

[cheggers]

Thanks Guys. I did plough through a few threads first.

I totally understand where you are both coming from. As for me, it is a serious decision to do contract based work, not just so I can say to the rest of them that I earn twice as much as them. I have a disabled daughter and I need as much flexibility as possible. I packed in work last June to spend time with her, and that was great, but time to earn some keep so I can take next summer off as well. I'm also hoping that it's a kick up the arse to do something for myself for once.

I'll keep plugging away, and will try to and avoid stupid posts....

[Sockpuppet]

Thanks for the great welcome onto the contracting forums. What is it? Treat newbies rashly so they learn some hard lessons or what?

No. Just the same questions week in week out begin to get tiresome.

[malvolio]

You got it...

Seriously 1 - I agree you are IR35 caught, given the scenario you describe. There are still ways you might not have been - working to single deliverables, for example - but if you want to spend 30%-odd extra on tax...

Seriously 2 - We've said it before and we'll say it again. Contracting is not a game, it is a serious life and career choice. If you can't take a bit of up-front realism, which the average newbie invariably sees as harshness, you're in the wrong job. If you can't cope with me, you'll have real problems when it comes to agents and HR...

Seriously 3 - I was contracting before IR35 happened, so had to learn to deal with it very quickly when the boundaries weren't even very well understood. They are now, and there is little excuse for not knowing them; you may well do, but not understanding PAYE doesn't exactly fill us cynical old-timers with confidence

Not so seriously - usual advice applies, read the guides, join the PCG, be aware you're basically on your own and best of luck for the future.

[cheggers]

Thud...thud...thud...


OK, someone has to ask. Since you apparently don't even know the absolute basics of how to get money out of your shiny new company, what makes you so sure you are inside IR35?

What - and you magically did I suppose when you got your first ever? Or perhaps you were born knowing it...


Anyway, here's the lowdown of the positions and from what I've learned in a day about IR35.

Company I used to work for needs me back to do some work for them. They supply me a 1 month rolling notice period and want me to work out of their office every day and they supply the laptop and phone etc. I'm not doing anything their other employees could'nt do, it's just that they're tulip and they need something actually finishing for once.

Ps -all:

Thanks for the great welcome onto the contracting forums. What is it? Treat newbies rashly so they learn some hard lessons or what?

[malvolio]

Thud...thud...thud...


OK, someone has to ask. Since you apparently don't even know the absolute basics of how to get money out of your shiny new company, what makes you so sure you are inside IR35?

[cheggers]

As a last point you ARE an employee. Your employed by your limited company. Silly.

Yes, silly me, slightly overlooked that point. Thanks for the advice to use paye.

[Sockpuppet]

Erm. You have to use PAYE.

Ok well you dont you can take all the money and them fill in a personal tax return and pay it that way but its much easier to do PAYE.

If you are inside IR35 AFAIK you have to pay yourself a deemed salary and only get 5% expenses - not sure if this changed recently.

As a last point you ARE an employee. Your employed by your limited company. Silly.

[cheggers]

Hi,

Just got my first contract,created a ltd company, but im firmly inside IR35. What do I do about paying myself? Can I use PAYE? Any other contractors out there fall inside IR35 do you have any tips/best practices you use when it comes to paying yourself?

Any advice would be much appreciated from a newbie who's just fallen into the whole new world of not being an employee