Please help me do contract maths!!!

[hugebrain]

Hugebrain,
You may find this article useful on Leaving the Country it should give you an answer to your particular circumstances.

Seems too good to be true. According to the article, Yourco ltd. could offer you a one year contract doing something abroad (maybe dreaming up new ideas on the beach). Then it can pay you a tax free salary.

If you have a reasonable war chest you save the 10% capital gains tax (and you don't have to close the company). Plus you can claim back the twentysomething percent corporation tax for at least the past two years. So anyone who has had a good contract that is coming to an end, they can get around 60% of their earnings just by taking a year off. This compares to the seventy-something percent they keep if they do another contract.

With the rates now, many people could make more money on the beach for a year than they could in a contract.

Anyone tried it? Sounds like a great way of getting back at the MPs for their "expenses".

[PhilAtBFCA]

Leaving The Country

Hugebrain,

You may find this article useful on Leaving the Country it should give you an answer to your particular circumstances.

Things you need to know are, where are you going ? How long for ? When are you leaving ? Are you completely leaving UK ( selling all property etc..) ? Where have you been the last 7 years ?

All these questions make a difference to the answer, but the article gives you the general view.

Phil

[hugebrain]

HE IS NOT AN ACCOUNTANT

So, beancounters, what does happen if you leave the UK for a year and then pay yourself a huge salary whilst abroad?

(apart from the Socialists refunding the corporation tax they stole from you)

[PhilAtBFCA]

HE IS NOT AN ACCOUNTANT

I think you may be right there.

Phil

[tino]

if you don t need to touch the money. you can also go on anice holiday near the end of the year. before the end of your co tax year. make sure you are long enough away to not be in a tax resident for uk and not long enough to be one inthe countries you are travelling. that way you can pay yourself a wage without deducting tax as you are not doing the work in the uk.

HE IS NOT AN ACCOUNTANT

[DiscoStu]

if you don t need to touch the money. you can also go on anice holiday near the end of the year. before the end of your co tax year. make sure you are long enough away to not be in a tax resident for uk and not long enough to be one inthe countries you are travelling. that way you can pay yourself a wage without deducting tax as you are not doing the work in the uk.

Fail

[stevo kane]

if you don t need to touch the money. you can also go on anice holiday near the end of the year. before the end of your co tax year. make sure you are long enough away to not be in a tax resident for uk and not long enough to be one inthe countries you are travelling. that way you can pay yourself a wage without deducting tax as you are not doing the work in the uk.

[tim123]

Ok I ve done a lot of due dilligemce on this and I just want to see whether I have missed anything

assume I work 240 days a year at 400 a day and I do not need to take any of the money out for the foreseeable future

am I correct in thinking that gross pay is 96 k which after corporation tax is about 78k??

And this can all be taken out at 10% effective tax by using entrepreneurs claim

I make out I can take home 70k after tax using this

anyone confirm pleeeasse???!!!

Being allowed to take out the cash balance of the company as a capital gain when you wind it up is a concession that the revenue can disallow.

I can't see them be very happy to allow it if the company never paid out any of its income to the directors using "normal" payment methods, BICBW.

tim

[dozer]

i always consult the highly qualified and anonymous users of internet forums for any important information in my life.

well done for ignoring fees and the correct tax rate.

[Crossroads]

Ok I ve done a lot of due dilligemce on this and I just want to see whether I have missed anything

assume I work 240 days a year at 400 a day and I do not need to take any of the money out for the foreseeable future

am I correct in thinking that gross pay is 96 k which after corporation tax is about 78k??

And this can all be taken out at 10% effective tax by using entrepreneurs claim

I make out I can take home 70k after tax using this

anyone confirm pleeeasse???!!!

240 working days a year...I'd be a little more conservative with your planning if I were you.

[jmo21]

240 * £400 = £96,000

Corp tax is calculated after all expenses are deducted.

Your salary is an expense for the business.

so if you paid yourself £96,000 salary........ how much corp tax would you pay?

21% of........ Bueller??

(clearly accountancy fees and other things must be accounted for....but you see where I'm going don't you?)

[PhilAtBFCA]

Steve,

You could try using the spreadsheet and video explanation on this link.

You could also use this to estimate the perm salary you would need for the same net income, but be careful with this as its not really comparing like for like, its less mathametical than that as you may have benefits from being a contractor that are non financial, and a different risk. So much depends alos on career level, age, personal circumstances etc. etc.

And no you cant just apply entrepreneurs relief and close the company as a matter of course. You can only do that if that company ceases trade, and you may have already extracted dividends and salary out beforehand.

Hope that helps a bit !

Phil

[pmeswani]

I woul really appreciate help here

if anyone can also indicate what perm salary thy would need to nit take this contract that would also be a tremendous help

Have you tried speaking to an Accountant? I hear some of them are quite good at this sort of stuff.

[SteveMcadden1]

Ok I ve done a lot of due dilligemce on this and I just want to see whether I have missed anything

assume I work 240 days a year at 400 a day and I do not need to take any of the money out for the foreseeable future

am I correct in thinking that gross pay is 96 k which after corporation tax is about 78k??

And this can all be taken out at 10% effective tax by using entrepreneurs claim

I make out I can take home 70k after tax using this

anyone confirm pleeeasse???!!!

I woul really appreciate help here

if anyone can also indicate what perm salary thy would need to nit take this contract that would also be a tremendous help

[SteveMcadden1]

Ok I ve done a lot of due dilligemce on this and I just want to see whether I have missed anything

assume I work 240 days a year at 400 a day and I do not need to take any of the money out for the foreseeable future

am I correct in thinking that gross pay is 96 k which after corporation tax is about 78k??

And this can all be taken out at 10% effective tax by using entrepreneurs claim

I make out I can take home 70k after tax using this

anyone confirm pleeeasse???!!!