Reply to: NoLongerLimited, Prosperity 4

[bangface]

Tell them it's illegal to limit the right, it is a free choice by the worker. If they persist, refer them to the DTI and see how long they stay in business.

Yes, I agree with Malvolio on this one, this is extremely bad practice if NLL are actually pushing their guys to opt out of the regs. They should offer the individual an unbiased opinion as to the pros and cons of opting in or out of the regs depending on whether they are trying to work inside or outside of ir35. The ultimate choice should then be down to the individual to make.

[Bradley]

Practical effect

Sorry, but 65K of this money was already there. You're not getting your money back at all. Talk about smoke and mirrors.

tim

I don't know where you get the £65k from? Most people already have a pension fund of some description unless like you they're opposed to it on "idealogical" grounds and so dogmatic that they won't listen to any arguments against that point of view.

How about this one then? If you're 50 and you have the relevant earnings basis - post A day that will be salary and dividends taken - then it could cost you £60k to make a £100k contribution to your pension pot. That's £78k initially invested plus cheque for basic rate tax from Gordon Brown for £22k less £18k further higher-rate tax relief. If you were to recycle a tax-free lump sum prior to A day then the cost would be even less.

In five years you could then get a cheque for £95k following my example above.

What sort of return on investment would you need if you put £60k into property over 5 years to get similar sort of returns?

[tim123]

well 25% of the fund value will be tax-free when you do decide to take pension commencement lump sum and the remaining 75% could be subject to income draw down at rates of up to 120% of the annuity rate.

So what if current PF value £200k. You make contribution of £100k from your copmpany.

In 5 years time fund value £380k = tax-free lump sum of £95k or 95% of your initial £100k sum invested plus a percentage of the tax-free uplift in value.

Sorry, but 65K of this money was already there. You're not getting your money back at all. Talk about smoke and mirrors.

tim

[Bradley]

Tax-free

Even with draw-down it's still dead money. You can't touch it until 55 and then you can have 5% (is it?) pa. What about the other 95%

tim

well 25% of the fund value will be tax-free when you do decide to take pension commencement lump sum and the remaining 75% could be subject to income draw down at rates of up to 120% of the annuity rate.

So what if current PF value £200k. You make contribution of £100k from your copmpany.

In 5 years time fund value £380k = tax-free lump sum of £95k or 95% of your initial £100k sum invested plus a percentage of the tax-free uplift in value.

[tim123]

I can't agree. You can enter into something called income draw-down after age 55 under the new rules (and the old rules by the way) which means that you don't have to buy an annuity. Under the new rules you won't even be forced to buy an annuity after age 75 but can buy something else for pension purposes. Tax is payable on the draw down but you can then wait until annuity rates improve.

Even with draw-down it's still dead money. You can't touch it until 55 and then you can have 5% (is it?) pa. What about the other 95%

tim

[tim123]

If you want to go brolly then I would suggest Parasol might be a better bet out of the two.

NLL, as I understand it from my conversation with the chief there, never allows contractors to opt in. If you want more flexibility to opt in or out, depending on what your working conditions are, then it's not such a good choice.

I'm still not convinced that a PAYE employee of a management company is allowed the choice. The legislation gives a "work seeker who is a limited company" the choice to opt out, but the management company is not the "work seeker" here.

tim

[malvolio]

going to the same place everyday working a standard week on a 12 month contract

So do I - none of that matters. Do you have any discretion about how you do the job, if they have no work for you do you still have to be paid or if you don't turn up do they have to pay you, do you have a right to send a substitute. Those are the tests that matter - pass any one and you are most likely outside IR35. Perhaps you should read the PCG's First Timer guide again.

Ermm: "Easy solution" and "maximise income"? Does not compute...if you want easy, stay permanent! But if you have a breathing space, think carefully, you could save a lot of money.

BTW, well done on making the changeover. Enjoy it.

[Monder]

Ta

I suppose I could start an ltd, I just wanted an easier solution as I'm moving out of easy permy street. With that in mind I have 4 weeks to get it sorted so why the hell not. btw, I WILL be caught by IR35 (going to the same place everyday working a standard week on a 12 month contract).

[malvolio]

I am likely to be hit by IR35 and basically want to maximise my income

You are IR35-caught or you aren't. Which is it? You really ought to know before you start, but it might still be worth getting a review of the contract from Bauer & Cotterell or the like. 95% of the time, IR35 is voluntary (and if a few more people realised that we wouldn't have the problems we do...)

If you want to maximise your income, get your own company and learn how to use it properly. Umbrellas mean you pay full tax and NICs on 100% of your income and you pay the umbrella as well, LtdCo and IR35-caught means you pay full tax and NICs on 95% of it and an accountant is cheaper than an umbrella. Go figure... Composites are not for the newbie, BTW, so don't be tempted.

And to be really fair, the best way to maximise your income is to get the rate up as high as possible, not by trying to bend the tax laws to breaking point!

[Monder]

I am just about to start contracting myself and was going to go Umbrella in the short term at least. I created a shortlist from the umbrella directory on this site of: Parasol, Danbro, P4 and Steed Solutions (Which doesn't seem to be an umbrella). I am likely to be hit by IR35 and basically want to maximise my income. Can anyone offer any experiences of Danbro at least? I have scrubbed P4 now thanks to this thread.

[Bradley]

Its a free world

Tell them it's illegal to limit the right, it is a free choice by the worker. If they persist, refer them to the DTI and see how long they stay in business.

They probably word in such a way that you'd be insane not to opt out without actually denying you the right - does anyone know?

[malvolio]

NLL, as I understand it from my conversation with the chief there, never allows contractors to opt in.

Tell them it's illegal to limit the right, it is a free choice by the worker. If they persist, refer them to the DTI and see how long they stay in business.

[Denny]

If you want to go brolly then I would suggest Parasol might be a better bet out of the two.

NLL, as I understand it from my conversation with the chief there, never allows contractors to opt in. If you want more flexibility to opt in or out, depending on what your working conditions are, then it's not such a good choice.

[ASB]

Immediate Vesting

Bradley mentioned income drawdown.

Another potentially useful method (for the over 50s) can be immediate vesting.

Some details for the terminally bored:

http://www.pensionadvice.ltd.uk/s2/m...ateVesting.htm

[Stimpy]

I made the unfortunate decision to call Proverity4. And yes I got the hard sell.
However once I told them that they had such a bad reputation, i.e. search for "properity4+ forum" they have never called again.