OK - I'll be nice and assume you really do understand nothing, and are not a sockpuppet.
If you do work, yourco invoices company. Yourco gets paid THE WHOLE amount invoiced.
Yourco then decides what to pay you.
If within IR35, you deduct valid expenses (travelling etc level - not MP level), then do a complicated calculation which ends up with yourco spending 95% of what is left paying you (including NI tax etc that yourco has to pay to keep our MPs.)
Agency will NOT deduct anything - they pay you the full amount. So assume the following (nice easy sums) for within IR35
You have a contract for £220 per day. You have £20 travelling expenses. Yourco invoices for £1100 at end of week.
You take the £1100, subtract off the £100 travelling costs. Left with £1000
You have to use £950 in paying you. That includes the employers NI costs.
That of course doesnt include VAT - I didnt want to make it too complicated!
If outside of IR35, of course you can pay some of your money through dividends etc.
Now please go and read the first timers guide.
Also choose a good accountant, who can explain this all to you. One who understands contractors. Otherwise you will become HMRC fodder very quickly
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Reply to: PSC Limited Company advice.
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Previously on "PSC Limited Company advice."
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Originally posted by internetpseudonym View PostYou guys are a world of charity.
On the whole we have to do our own research, or pay someone else to give us answers to questions (contract lawyers, accountants, etc.)
Now then.
- If you cannot manage to follow the links in the CUK Navigation box on this web site, why on earth should we hold your hand?
- In all your IR35 research, did you never come across the PCG? Were you not tempted by their Guide to Contracting?
- The accountants that post on here generally have PDFs of advice on their web sites including first timer's guides. Have you read any of it?
Do the above, AND READ WHAT YOU FIND.
Then come back. And ask politely.
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I smell blood.
Originally posted by internetpseudonym View PostHi,
I am a contractor and have decided to set myself up as a so-called PSC, which is to say a Ltd company, on my own.
You've made a decision. No doubt having done lots of research.
Off you go.
Originally posted by internetpseudonym View PostI'm looking here for advice
Originally posted by internetpseudonym View Postfor info that I havn't been able to find elsewhere
Originally posted by internetpseudonym View PostMy contract work currently takes two distinct forms
Originally posted by internetpseudonym View Postwork that is calculated hourly and paid as PAYE within IR35, and work for which I invoice as a lump sum for a designated project. Both are presently processed though an umbrella and it is the latter I am particularly keen to maximise my tax advantages on.
Originally posted by internetpseudonym View PostSo far, the only information in plain english I can find is either outdated, or BS from Umbrellas, set-up services and other people trying to make a buck.
Originally posted by internetpseudonym View Post1. The lump sum monies.
Originally posted by internetpseudonym View Post2. My main confusion is with turning the money in the business account into money payed to me, while maximising the end sum.
Originally posted by internetpseudonym View PostFor IR35 work, I would be invoicing the employment agency ( I rarely work for end client directly) who I understand would deduct both employers and employees deductions before the money reaches my account, paying me the NET?
Originally posted by internetpseudonym View PostWould I then have to incur repeat deductions on my drawings to myself?
Originally posted by internetpseudonym View Postwhere is the tax being deducted and at what stage?
Originally posted by internetpseudonym View Post3. If much of my money is coming to me in lump sums, i gather the most advantageous way to receive that, is to pay it to myself as a regular low-tier wage? But in such an instance would I not be incurring employers and employees deductions again and Corporation Tax, negating the advantages? Any and all advice welcome.
Originally posted by internetpseudonym View PostIf I sound like an idiot, it was deliberate.
Originally posted by internetpseudonym View PostI actually found that very helpful, as will many other (idiots like me) joining the exodus from Umbrella to PSC.
Originally posted by internetpseudonym View PostThe whole reason that the many Umbrellas and Set Up services that haunt this site exist, is to exploit our historic belligerence to our own finances.
Originally posted by internetpseudonym View PostI did not previously realise that my company would be receiving all forms of payment as Gross - and now I do.
Originally posted by internetpseudonym View Postwhy on earth would I talk to a real-world accountant with that little preparation, when I can ask the basics first on an internet forum? Think about it.
Originally posted by internetpseudonym View PostIf you go back to the first sentence in my first post, you'll see that I was reluctant to bandy about this 'PSC' thing since I don't understand it to be a genuine legal term.
Originally posted by internetpseudonym View PostAnyway, none of this is helping answer my main question, which I still cant find a straight answer to elsewhere:
Originally posted by internetpseudonym View PostMuch of my work is through employment agencies and is presently processed by an Umbrella. They duly estimate this work to be inside of IR35 and deduct accordingly, paying me the NET.
With my own company, does the nature of the agency work, place me under any obligation to pay myself the full amount received, or indeed any of it?
That is, does where the money came from have any baring on IR35, or does that only come into play once I deduct my own salary from my own business?
Originally posted by internetpseudonym View PostYou guys are a world of charity.
Originally posted by internetpseudonym View PostNow (and this is the question) is the business (employer) legally obliged to pay me (employee) the full amount determined in the contract with the agency/client?
HTH.
Originally posted by internetpseudonym View PostAnd I officially don't care if I sound like an noob
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Originally posted by internetpseudonym View PostBut at the same time, why on earth would I talk to a real-world accountant with that little preparation, when I can ask the basics first on an internet forum? Think about it.
Just a thought...
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You guys are a world of charity.
So, say I'm employed through a recruitment agency to go work for a client, in a capacity that would be considered inside of IR35 ruling. The recruitment agency then pays gross into my business account. right?
Now (and this is the question) is the business (employer) legally obliged to pay me (employee) the full amount determined in the contract with the agency/client?
Or is it to my discretion to pay (myself) as much or as little of it as I like, provided said amount is accompanied by the appropriate deductions - thereby reducing employee deductions (and pay) but not employer?
That seems a fair enough question. And I officially don't care if I sound like an noob, so knock yourselves out.
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Originally posted by internetpseudonym View PostI did not previously realise that my company would be receiving all forms of payment as Gross - and now I do.
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Originally posted by BrowneIssue View PostI wish you'd stop using that term unless you know what it means. If so, do tell us.
Anyway, none of this is helping answer my main question, which I still cant find a straight answer to elsewhere:
Much of my work is through employment agencies and is presently processed by an Umbrella. They duly estimate this work to be inside of IR35 and deduct accordingly, paying me the NET.
With my own company, does the nature of the agency work, place me under any obligation to pay myself the full amount received, or indeed any of it?
That is, does where the money came from have any baring on IR35, or does that only come into play once I deduct my own salary from my own business?Last edited by internetpseudonym; 11 May 2009, 17:33.
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Originally posted by internetpseudonym View PostPSC
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If I sound like an idiot, it was deliberate. Since a lot of the more advanced information is easy to come by but the most basic is overlooked and assumed to be obvious. Its this assumption that renders the entire HMRC site gibberish to most people.
I actually found that very helpful, as will many other (idiots like me) joining the exodus from Umbrella to PSC. The whole reason that the many Umbrellas and Set Up services that haunt this site exist, is to exploit our historic belligerence to our own finances.
I did not previously realise that my company would be receiving all forms of payment as Gross - and now I do. And this simple clarification has cleared up the rest of it for me. So thank you. But at the same time, why on earth would I talk to a real-world accountant with that little preparation, when I can ask the basics first on an internet forum? Think about it.
Leave a comment:
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Originally posted by internetpseudonym View PostHi,
I am a contractor and have decided to set myself up as a so-called PSC, which is to say a Ltd company, on my own. I'm looking here for advice on how to use this to my best (tax) advantage and for info that I havn't been able to find elsewhere, and hopefully others finding this will have their questions answered in the process.
My contract work currently takes two distinct forms - work that is calculated hourly and paid as PAYE within IR35, and work for which I invoice as a lump sum for a designated project. Both are presently processed though an umbrella and it is the latter I am particularly keen to maximise my tax advantages on.
So far, the only information in plain english I can find is either outdated, or BS from Umbrellas, set-up services and other people trying to make a buck. So hopefully others can benefit from any clear answers to my questions. Which are:
1. The lump sum monies. Is there any advantage (or disadvantage) to my invoicing for these sums divided up as a daily rate, or should I continue to invoice for them as a single figure. The tax distinction isn't clear to me.
2. My main confusion is with turning the money in the business account into money payed to me, while maximising the end sum.
For IR35 work, I would be invoicing the employment agency ( I rarely work for end client directly) who I understand would deduct both employers and employees deductions before the money reaches my account, paying me the NET?
Would I then have to incur repeat deductions on my drawings to myself?
Or by removing the intermediary (Umbrella) would I be receiving the gross earnings and making my own deductions to be paid at end of account year?
In short, in the transfer of IR35 payments from Client/Agency to Business Account to Personal Account, where is the tax being deducted and at what stage?
3. If much of my money is coming to me in lump sums, i gather the most advantageous way to receive that, is to pay it to myself as a regular low-tier wage? But in such an instance would I not be incurring employers and employees deductions again and Corporation Tax, negating the advantages? Any and all advice welcome.
I don't think you know enough about the Contractor market to seriously start up your own Limited company.
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PSC Limited Company advice.
Hi,
I am a contractor and have decided to set myself up as a so-called PSC, which is to say a Ltd company, on my own. I'm looking here for advice on how to use this to my best (tax) advantage and for info that I havn't been able to find elsewhere, and hopefully others finding this will have their questions answered in the process.
My contract work currently takes two distinct forms - work that is calculated hourly and paid as PAYE within IR35, and work for which I invoice as a lump sum for a designated project. Both are presently processed though an umbrella and it is the latter I am particularly keen to maximise my tax advantages on.
So far, the only information in plain english I can find is either outdated, or BS from Umbrellas, set-up services and other people trying to make a buck. So hopefully others can benefit from any clear answers to my questions. Which are:
1. The lump sum monies. Is there any advantage (or disadvantage) to my invoicing for these sums divided up as a daily rate, or should I continue to invoice for them as a single figure. The tax distinction isn't clear to me.
2. My main confusion is with turning the money in the business account into money payed to me, while maximising the end sum.
For IR35 work, I would be invoicing the employment agency ( I rarely work for end client directly) who I understand would deduct both employers and employees deductions before the money reaches my account, paying me the NET?
Would I then have to incur repeat deductions on my drawings to myself?
Or by removing the intermediary (Umbrella) would I be receiving the gross earnings and making my own deductions to be paid at end of account year?
In short, in the transfer of IR35 payments from Client/Agency to Business Account to Personal Account, where is the tax being deducted and at what stage?
3. If much of my money is coming to me in lump sums, i gather the most advantageous way to receive that, is to pay it to myself as a regular low-tier wage? But in such an instance would I not be incurring employers and employees deductions again and Corporation Tax, negating the advantages? Any and all advice welcome.Tags: None
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