Part time employed and self emplyed

[northernladuk]

Many thanks, just for the record, yes my part time role does and has already used up my tax free allowance for this year. I will try and find an accountant to give me some clarity and steer me in the right direction based on my circumstances.

As this is a small piece of work it might not matter but be aware of the MSC Legislation and the problems floating around. Your accountant telling you how to run your business is a red flag at the moment so try to find out as much as you can yourself so you can just as tax and accounting questions, not how best to run your company.

Probably not an issue if it's small potatoes but just in case.

[AlanBurgess]

There's a background consideration, I think, and that's the value of the part-time employment income (and any other taxable income). Does that use up all of your tax free personal allowance?
If it doesn't then that could be a pointer towards being an employee of LtdCo to make best use of the tax free allowance.

If you need to decide quickly, then maybe getting your accountant to look at this would be a good option. In any case, when you do come up with a model, I'd suggest having an accountant validate it.

Many thanks, just for the record, yes my part time role does and has already used up my tax free allowance for this year. I will try and find an accountant to give me some clarity and steer me in the right direction based on my circumstances.

[northernladuk]

Many thanks for the replies

Just to clarify hobnob, Protagoras, @fred-bloggs I am employed part time and work Mondays and Fridays in that that role, I also have a Ltd company, of which I am a director. So to answer the question, and apologies for my poor wording, I have 1 part time role and I am a director of my own business, which has no employees.

I am being asked to work a couple of days a week under my Ltd company, so wanted to know if from a corporation tax perspective, I was better being a part time employee, or not being employed at all by my own company and simply take directors dividends?

I'm no master of spreadsheets, so any pointers as to what information I need to be calculating would be great! I have used an accountant in the past, but I'm trying to learn more about the way all this works and there seems to be a lot of if's and but's with all scenarios. :|

You really need to understand LTD's better. As pointed out already you are not an employee of your LTD and it's very important to know why. For example, if you were an employee you'd be legally obliged to pay National Minimum Wage, something and office holder does not so you've already blown your own plan by calling yourself something you are not.

Learn how LTD's work, what a director/office holder is and what the difference is between that and an employee and you'll struggle a lot less with your problem.

[Protagoras]

Many thanks for the replies
I am being asked to work a couple of days a week under my Ltd company, so wanted to know if from a corporation tax perspective, I was better being a part time employee, or not being employed at all by my own company and simply take directors dividends?

There's a background consideration, I think, and that's the value of the part-time employment income (and any other taxable income). Does that use up all of your tax free personal allowance?
If it doesn't then that could be a pointer towards being an employee of LtdCo to make best use of the tax free allowance.

If you need to decide quickly, then maybe getting your accountant to look at this would be a good option. In any case, when you do come up with a model, I'd suggest having an accountant validate it.

[Protagoras]

Many thanks for the replies

Just to clarify hobnob, Protagoras, @fred-bloggs I am employed part time and work Mondays and Fridays in that that role, I also have a Ltd company, of which I am a director. So to answer the question, and apologies for my poor wording, I have 1 part time role and I am a director of my own business, which has no employees.

Thanks for clarifying the income streams. Interpretation victory to @Fred Bloggs

[Fred Bloggs]

Many thanks for the replies

Just to clarify hobnob, Protagoras, @fred-bloggs I am employed part time and work Mondays and Fridays in that that role, I also have a Ltd company, of which I am a director. So to answer the question, and apologies for my poor wording, I have 1 part time role and I am a director of my own business, which has no employees.

I am being asked to work a couple of days a week under my Ltd company, so wanted to know if from a corporation tax perspective, I was better being a part time employee, or not being employed at all by my own company and simply take directors dividends?

I'm no master of spreadsheets, so any pointers as to what information I need to be calculating would be great! I have used an accountant in the past, but I'm trying to learn more about the way all this works and there seems to be a lot of if's and but's with all scenarios. :|

OK. So, as I suspected all along. You're not self employed and you aren't intending to be self employed. Being a limited company director is not self employment. Normally it isn't employment either, unless you have a contract of employment. That would be very unusual. Being paid salary by your limited company does not make you an employee.

[jamesbrown]

Corporation tax is paid on profits.
Corporation tax and employment status have nothing to do with each other.
Directors and dividends have nothing to do with each other. Dividends are paid to shareholders from retained profits.

Guides are over on the right (trust me, you need them) --->

[AlanBurgess]

Many thanks for the replies

Just to clarify hobnob, Protagoras, @fred-bloggs I am employed part time and work Mondays and Fridays in that that role, I also have a Ltd company, of which I am a director. So to answer the question, and apologies for my poor wording, I have 1 part time role and I am a director of my own business, which has no employees.

I am being asked to work a couple of days a week under my Ltd company, so wanted to know if from a corporation tax perspective, I was better being a part time employee, or not being employed at all by my own company and simply take directors dividends?

I'm no master of spreadsheets, so any pointers as to what information I need to be calculating would be great! I have used an accountant in the past, but I'm trying to learn more about the way all this works and there seems to be a lot of if's and but's with all scenarios. :|

[hobnob]

Just to clarify one point, you can be on the payroll of your limited company (as a director) without being an employee. I.e. you have 2 independent questions:
* Should I be an employee? (The answer is almost certainly no.)
* Should I be on the payroll? (As others have said, you need to play around with scenarios in Excel.)

[Fred Bloggs]

OP stated ...

"I am currently employed part-time, where I pay Tax, NI, Pension contributions etc, but I also work for myself and my own Ltd company."

I read that as OP has potential employment income streams
- part time employee [also]
- work for self (self-employed) [and]
- limited company

So I read this as there were three income sources to model ...

So - I read the title which specifically says self employment and part time employment but with a limted company. I suppose either of us is right depending on how you read it and the actual facts. It's extremely common for one man limited company owners to refer to themselves as self employed or working for themselves when they aren't. They aren't usually employees of their company either, another common misstatement.

Not to worry, I'm sure the message is quite clear. You can't model anything accurately unless you fully understand what it is you are modelling. GIGO.

[Protagoras]

Before OP models anything, he or she needs to understand they are not self employed. If they don't understand that, the wrong scenario entirely is going to be modelled in the spreadsheet.

OP stated ...

"I am currently employed part-time, where I pay Tax, NI, Pension contributions etc, but I also work for myself and my own Ltd company."

I read that as OP has potential employment income streams
- part time employee [also]
- work for self (self-employed) [and]
- limited company

So I read this as there were three income sources to model ...

[Fred Bloggs]

Before OP models anything, he or she needs to understand they are not self employed. If they don't understand that, the wrong scenario entirely is going to be modelled in the spreadsheet.

[Protagoras]

In general, the more paid out of the LtdCo in employee costs, the lower the profit, and therefore the lower the corporation tax.

You need to run the numbers to optimise income etc across multiple sources … its quite easy to model in a spreadsheet.

[AlanBurgess]

Hello

I'm after some advice regarding my current situation... I am currently employed part-time, where I pay Tax, NI, Pension contributions etc, but I also work for myself and my own Ltd company. As it stands I am not on the payroll of my Ltd company and therefore don't take a salary, but I was wondering if this will have a negative impact on the amount I pay in corporation tax?
Would I be better to add myself as a part-time employee in my own company at minimal hourly rate and take dividends, or stay as I am with a part-time role with someone else and just do work on the side and take dividend and expenses?

I hope that makes sense :|

Thanks in advance
Alan