Reply to: IR35 as you're approaching retirement

[bromleygirl]

Agree and have run the numbers. Using the giant pay calculator, it was very apparent that I am better off sticking with my current set up versus going outside and paying 25% Corporation Tax. Either way, regardless if I'm in or out, I'll still be limited to the 60k pension sacrifice limit.

[northernladuk]

For those who are inside and taking the approach of stashing as much as possible into their SIPP (which is what I'm currently doing), would you be tempted to switch to outside again and all that comes with for a slightly lower daily rate? I've been approached with an outside role but have to ask myself as I am now in my 50's if it's better to stay doing what I'm doing utilising my allowances as well from my lower last 3 years knowing that as from the next tax year I will be limited to 60k salary sacrifice or make the move now to outside again..What is better - stay inside or try outside again?

You really need to run the number for both gigs to see which actually is the most tax efficient. You then need to look at your personal situation and decide. No way can we suggest what you do with so little information particularly when the main driver is your personal needs/requirements.

[bromleygirl]

For those who are inside and taking the approach of stashing as much as possible into their SIPP (which is what I'm currently doing), would you be tempted to switch to outside again and all that comes with for a slightly lower daily rate? I've been approached with an outside role but have to ask myself as I am now in my 50's if it's better to stay doing what I'm doing utilising my allowances as well from my lower last 3 years knowing that as from the next tax year I will be limited to 60k salary sacrifice or make the move now to outside again..What is better - stay inside or try outside again?

[rootsnall]

I think some of you are forgetting that a SIPP is not just avoiding tax, but deferring it. Sure, you may have a lower marginal rate and no NI in retirement, but you ain’t retaining 90%+ in the long run. SIPP contributions only make sense to a point.

IMHO it is still a no brainer if you are 55 ( or near to ) and can afford to live off other savings for a few years. Everyone has different circumstances but I hope to give the 90% a run for it's money. Use of times 2 personal tax free allowances, income from ISAs, and use of your 25% tax free out of your SIPP, and the fag packet calculations look good. The freezing of allowances and the govts need to try and balance the books will I think make it tougher to avoid tax moving forward.

[Cryton]

HMRC have kicked off a round of IR35 checks with end clients and put the fear of God into them...

Have you got any further info on this please - do you know which end clients have been contacted?

Thank you.

[rashm2k]

Only if you have earnings this year of at least £180k. You can only put in max 100% of earnings regardless of how much you have ‘available’ due to carry forward rules.

yep you're right, but 180k is plenty, not going to be earning more than that, it's next year that I need to worry as the limit is 60k per year.

It's not a bad tax plan putting it all into a sipp, saves an enormous amount of tax.

This is not a platform for tax advice, but it's helpful to see what other people are doing.

one scenario could be that you have 1 million in a sipp, 250k is tax free, then you take 50k out per year paying only 20% tax, effective tax rate of 15%, saving 25%.

I'm not going to have anywhere near that, but I I can generate 50k per year then I'd be happy

[Lance]

You are right, I confused it with the limit where you need to appoint a liquidator

I assumed you meant the voluntary strike off limit in any case.

[Eirikur]

There is no MVL limit, that’s the point of an MVL as distinct from a strike off.

You are right, I confused it with the limit where you need to appoint a liquidator

[jamesbrown]

There is no MVL limit, that’s the point of an MVL as distinct from a strike off.

[Eirikur]

cool.
Might be a better option than MVL is what I'm thinking.

I reduced the cash in my company below the MVL limit (by paying into my pension) and am now going for closure and can withdraw the remaining amount as capital gains with the £6000 tax free limit (per shareholder) and 10% over the remaining bit as soon as my final accounts are being completed.

[Lance]

Yes, that's what I have done for this and last tax year

cool.
Might be a better option than MVL is what I'm thinking.

[Eirikur]

can you use retained profit in a LTD. to pay into a pension, in excess of your salary, if you are currently in an inside contract?

Yes, that's what I have done for this and last tax year

[Lance]

You can only exceed 100% of salary without additional tax as a director, which if you are inside IR35 you are not.

can you use retained profit in a LTD. to pay into a pension, in excess of your salary, if you are currently in an inside contract?

[Protagoras]

You can only exceed 100% of salary without additional tax as a director, which if you are inside IR35 you are not.

Ah yes.

[Guy Incognito]

You can only exceed 100% of salary without additional tax as a director, which if you are inside IR35 you are not.