Permie Job - Keep Ltd going

[VectraMan]

Right there with you. My accountant's done me a P45 (which seems a bit pointless as it's all from the previous tax year anyway), and closed PAYE. There's no point paying yourself a salary; you'll just pay more tax than you need to that way. I'm not paying my April salary even though I'm not starting the permie job until May.

I have a dividend to pay based on the month's contract I've just finished, which means I'll pay tax on it. If I was feeling more flush I'd leave the money in the company assuming that I might be in a better (or worse) position down the line, but for now I could do with the cash.

I'll probably deregister from VAT when the quarter is up, although submitting a nil return online every 3 months isn't much of a hardship. I also plan on ditching the accountant and doing the year end myself. That way I can keep the company going with only bank charges and the £15 to Companies House to worry about.

[ASB]

I forgot to mention IPR. My contract basically said "any IPR created during your employment is ours". This is quite common. I don't know how enforceable this would actually be in practice but again I got this substantially changed.

If YourCo happens to have some IPR in something and you do some further work which extends that IPR it could be a bit of a nightmare if your new employers have the arguable right to claim it.

[Peoplesoft bloke]

ASB- great stuff thanks. I've cleared the contractual stuff with my new employer.

[JoJoGabor]

I did this for 2 years over the recession. I withdrew all funds from the company account so the balance was zero after all tax was paid, deregistered for VAT and PAYE, and got my accountant to complete end of year accounts each year. It was pretty simple really. Then I re-registered everything when I came to back to the blessed-land of contracting

[ASB]

I am taking a permie job. I know it's not big or clever but there it is - I have my reasons.
I intend to keep MyCo running at least in the short term.
I'm not intending to issue a P45 since I am a director, not an employee - I think that means I need to do a P46 for permieco.
I'm not sure whether to continue to pay a salary as, other than a small amount of admin work, I won't be doing any real work for MyCo
I will pay dividend(s) as appropriate when I've finalised what's due.

Anyone done this and have any wisdom to share?

Your contract of employment may have restrictions about other employment. Whether you agree with it or act on it is of course your decision (mine had some pretty hefty restrictions which they wouldn't generically remove but did update related to MyCo).

In terms of taxation though it will make no difference overall you should fill in a P46. This will generally cause you to get a zero tax code for you new employment. Of course this means you get no allowances and if you are not paying yourself any salary through YourCo then you will have unused allowances. Fill in a tax return and it will sort itself out - you will get a rebate.

The way round this is to write to HMRC and ask them to allocate your tax code to your new employment (tell them it is your main employment). They will then issue a new code to your new employers and a new code (zero) to your co.

In terms of tax efficiency any salary paid from yourco will be less than optimal, there is no reason to pay a salary. Just take some divvies. Though don't forget you are likely to be a higher rate taxpayer so will have to hand over 25% of the net divi when you do your tax return.

If you are not a higher rate taxpayer then it would certainly be sensible to pay divi at least upto the basic rate threshold overall.

If there is a fair sum in the company liquidating through the concession of capital distribution may be helpful, at least you can use your CGT allowances - if you haven't already used them elsewhere.

If you choose to invest any retained funds be careful not to become a close investment company, full CT rate applies. There is, in my view, quite a risk of this if the company is not trading.

If you don't need the money and don't disapprove of pensions consider stuffing it in a pension, however before doing this ensure that you can take advantage of carry back (not sure of the current rules) in order to ensure you get the CT relief against previous CT. Otherwise all you will achieve is to create a tax loss going forward that you may never be able to utilise depending on whether your co continues trading.

[Peoplesoft bloke]

I am taking a permie job. I know it's not big or clever but there it is - I have my reasons.
I intend to keep MyCo running at least in the short term.
I'm not intending to issue a P45 since I am a director, not an employee - I think that means I need to do a P46 for permieco.
I'm not sure whether to continue to pay a salary as, other than a small amount of admin work, I won't be doing any real work for MyCo
I will pay dividend(s) as appropriate when I've finalised what's due.

Anyone done this and have any wisdom to share?