Advice please, taking on a contract for a second income

[Ardesco]

As I said earlier, you can prolly get away with paying no CT in your first year of trading.


Talk to your accountant.

[DaveB]

But you will end up paying CT on the money not taken out of the Co. as wages. 19% of 5 grand or so is worth doing some paperwork for.

[Ardesco]

Entirely reasonable to pay it all out in divi's.


You don't need to take a wage as you have your main job. Taking a wage from your company will put you on a BR tax code as it is income from a second job which means you will then have to claim back tax at the end of the year, yadda yadda.

Much easier and less paperwork to just take divi's.

[DaveB]

I work in support with no previous IB experience.

Unfortunately I could do with the extra income so I can't keep it in the company, is it feasible to pay entirely dividends?

It is but is not the best way to do it.

Take a minimal salary from the ltd, plus your expenses. Then take divi's up to the tax limit. Won't be much if you have a permie salary as well but it all helps. This way you pay no extra Income Tax until you go over the tax limit. At whch point you pay %25 on income over that ( IIRC ). Talk to an accountant, i'm sure they will be able to advice you exactly how to do it.

[Yatesy]

I work in support with no previous IB experience.

Unfortunately I could do with the extra income so I can't keep it in the company, is it feasible to pay entirely dividends?

[Ardesco]

Pay the money into your LTD and leave it there.

Your tax burden doesn't increase and if I remember correctly during the first year of trading you can probably get away with paying no corp tax (talk to an accountant though)

[VectraMan]

IB doesn't pay a permie enough to get into the higher rate bracket?

But to answer the question, just pay yourself dividends from yourco for whatever money you make.

[Yatesy]

Ok, to give a bit of background, I formed my own ltd last year as I was looking to start contracting, however the oppourtunity to break into IB came along through a fixed term contract involving direct employment, I intend to stay in the sector after the fixed term has ended.

Now I have also secured a weekend moves & changes contract at another bank, my main employment is obviously PAYE (probably until November) I will be providing this weekend service on a ad-hoc basis and I don't believe I fall foul of IR35 on this.

I am not earning above the higher rate tax threshold at the moment (although this contract could tip me over it), I have my ltd co ready to go and my business account set up, if it was you in my shoes how would you operate your payment mechanism?