Entrepreneurs' relief

[northernladuk]

Also a hijack, but with regard to claiming ER and working in a similar trade within 2 years of ltd company liquidation, does working through an umbrella in a similar capacity fall afoul of this or not?

We aren't 100% certain but for me you are now employed so no. The idea is that you'd don't shut down, claim tax relief and then just start again. The tax relief is a sham. Closing down because you are becoming employed is a legitimate reason.

The elephant in the room, which think many people are missing, is what happens if you take an inside gig and 3 months later it ends and you want to take another outside one. I went inside but ended up only doing 6 weeks. I had intention.of shutting then Ltd so no issues.

I think some people are being very short sighted and closing the company just because they've secured an inside gig, not a forever job. I do think closing, going brolly for 6 months and then attempting to open another company is slam dunk falling foul and I suspect is going to trip a lot of people up.

[Zero Liability]

Also a hijack, but with regard to claiming ER and working in a similar trade within 2 years of ltd company liquidation, does working through an umbrella in a similar capacity fall afoul of this or not?

[Maslins]

@Maslins thanks for your reply. I don't foresee it being massively different - let's say I'm working on embedded software "9-5" in a contract role, then just do websites in the new LTD.

Would my wife being the director and only shareholder of the new company make any difference?

Your latter suggestion might superficially fool some who don't look at all carefully...but if it was looked into, to my mind doing so without good commercial reason would hurt your case. In my eyes it would be a demonstration of you trying to hide/dodge the rules, so perhaps demonstrates you know you fall foul of the rules.

[hlds]

@Maslins thanks for your reply. I don't foresee it being massively different - let's say I'm working on embedded software "9-5" in a contract role, then just do websites in the new LTD.

Would my wife being the director and only shareholder of the new company make any difference?

[Maslins]

@hlds impossible for anyone to give you a cast iron answer re that. Would the "on the side" work you did going forwards be significantly different to the contracting work you'd done before? Purely the fact that it would be evenings/weekends going forward, rather than Mon-Fri 9-5, likely wouldn't be considered sufficient reasoning.

Having said that, I think it'd be far lower risk than if you were to restart contracting (via a Ltd Co) full time.

[hlds]

Slight hijack (apologies) but hopefully relevant

I'm currently contracting through my own ltd (no wife involvement), if determined caught by IR35 in April I plan to go permie and close the company (and was hoping to take the retained profits as capital with ER)

If I wanted to work "on the side" using a ltd (own projects, not contracting), would that be possible using a new company without forfeiting the ER? I'd already be a higher rate taxpayer in the permie job (hopefully!) so would just plan on taking irregular dividends. How about if it was the wife's company?

I can find plenty on the web about qualifying for the relief, but not much about this two year rule after you've done it

Thanks!

[craigy1874]

Please advise WHY you closed the company so we can help further.

It isn't as simple as saying - oh you closed down via MVL, no more contracting for 2 years.

[Old Greg]

My PSC is 50/50 split with my wife, and I've never had any issues or even questions from agencies regarding that.

Agreed. IIRC occasionally agents want the contractor to be sole director.

[Paralytic]

Agents often want the contractor to be the majority shareholder, often the only one, so you will struggle with that regardless of the tax situation.

My PSC is 50/50 split with my wife, and I've never had any issues or even questions from agencies regarding that.

[ChimpMaster]

Better off just working under a PAYE umbrella, assuming the point is that you want to return to contracting.

[Bobo]

Thanks Everyone.

[ContrataxLtd]

Hi All

I went down the Entrepreneurs' relief route in April this year, my understanding is that I can not operate under a limited company for a 2 year period unless I'm prepared to forfeit the reduced tax allowance.

A couple of questions:
Can I work as an employee under my wife's limited company
Does it make commercial sense to go down this route?

Thanks in advance

Depends on why you closed the company, the 2 year rule isn't the only criteria to be met to forfeit the capital treatment. It may be possible to return but you would need professional advice to analyse your situation especially if there is a large amount of tax on the line. You shouldn't rely on an answer on here for something that could be very important.

Martin
Contratax Limited

[northernladuk]

Surely there is no advantage being an employee with her? The full income will be taxed like it would with a brolly so what's the point?

If you are thinking of becoming a shareholder of her company paying divis etc then no as you'll be continuing in the same way you were before.

Agents often want the contractor to be the majority shareholder, often the only one, so you will struggle with that regardless of the tax situation.

[Amanensia]

No. Unless the work is completely different to what you were doing in the now-closed company. You could however work as an employee for a completely independent company in which you had no ownership, direct or indirect.

[Bobo]

Hi All

I went down the Entrepreneurs' relief route in April this year, my understanding is that I can not operate under a limited company for a 2 year period unless I'm prepared to forfeit the reduced tax allowance.

A couple of questions:
Can I work as an employee under my wife's limited company
Does it make commercial sense to go down this route?

Thanks in advance