Originally posted by Kugel
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Previously on "P45 and Tax. Permanent > Contract mid-Fiscal Year."
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Originally posted by jsnetman View PostHi,
In a similar position to the initial posting, left permanent employment to go contracting in July 2011, had been paid more than the threshold in previous employment so have not paid myself any formal wages and was looking to register for PAYE before April this year.
Originally posted by jsnetman View PostSould I have filled out a self assessment this February?
Originally posted by jsnetman View PostI know some of you will say get an accountant but decided to try and do it myself as I'm not in the VAT bracket and decided my business and accounts would be straight forward. The only thing that baffles me is the PAYE and self assesment part of it, have tried researching it but it just gets more complicated the more I read.
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Originally posted by jsnetman View PostHi,
In a similar position to the initial posting, left permanent employment to go contracting in July 2011, had been paid more than the threshold in previous employment so have not paid myself any formal wages and was looking to register for PAYE before April this year.
Sould I have filled out a self assessment this February?
I know some of you will say get an accountant but decided to try and do it myself as I'm not in the VAT bracket and decided my business and accounts would be straight forward. The only thing that baffles me is the PAYE and self assesment part of it, have tried researching it but it just gets more complicated the more I read.
Also an accountant can advise you on what salary to take and dividneds as some good sound tax planning advise is vital in the first year.
An accountant could also register you with HMRC for PAYE, VAT and self assessment if you are not registered.
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Originally posted by jsnetman View PostHi,
In a similar position to the initial posting, left permanent employment to go contracting in July 2011, had been paid more than the threshold in previous employment so have not paid myself any formal wages and was looking to register for PAYE before April this year.
Sould I have filled out a self assessment this February?
I know some of you will say get an accountant but decided to try and do it myself as I'm not in the VAT bracket and decided my business and accounts would be straight forward. The only thing that baffles me is the PAYE and self assesment part of it, have tried researching it but it just gets more complicated the more I read.
Leave a comment:
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Originally posted by jsnetman View PostHi,
In a similar position to the initial posting, left permanent employment to go contracting in July 2011, had been paid more than the threshold in previous employment so have not paid myself any formal wages and was looking to register for PAYE before April this year.
Sould I have filled out a self assessment this February?
I know some of you will say get an accountant but decided to try and do it myself as I'm not in the VAT bracket and decided my business and accounts would be straight forward. The only thing that baffles me is the PAYE and self assesment part of it, have tried researching it but it just gets more complicated the more I read.
PAYE is totally separate, and relates to any wages you pay yourself. You need to set up a PAYE scheme, which you can do online here: HM Revenue & Customs: Register as an employer by email
Regarding the VAT, you may want to consider registering even if you're below the bracket as you can then benefit from the Flat Rate Scheme.
If it's your first year and you're confused about the basics then it's worth talking to an accountant. By all means do it all yourself in the second year if you're confident, but it's handy to get a grounding first and use that year to gain as much knowledge as possible from them. That way you'll know about deadlines, filing, taxes, expenses, IR35 etc when you do it all yourself.
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Similar Position
Hi,
In a similar position to the initial posting, left permanent employment to go contracting in July 2011, had been paid more than the threshold in previous employment so have not paid myself any formal wages and was looking to register for PAYE before April this year.
Sould I have filled out a self assessment this February?
I know some of you will say get an accountant but decided to try and do it myself as I'm not in the VAT bracket and decided my business and accounts would be straight forward. The only thing that baffles me is the PAYE and self assesment part of it, have tried researching it but it just gets more complicated the more I read.
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Originally posted by topper View PostI'll make sure to run through all this with my accountant, but just to confirm by what you mean about if deferring to the next year, that is only if I take the same out as I would have earned as a permie, it's not deferred if I stay under the higher tax band.
If you can't stay below the higher rate tax band then you have just deferred the tax bill on that money for one year by using the Directors Loan instead of taking a dividend.
I tended to use the Directors Loan Account to withdraw money from the company at the end of the tax year, but I could never stay below the higher rate tax band so the effect was only to defer the tax on those drawings to the following tax year.
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Originally posted by Gonzo View PostI was always one for overdrawing the DLA at the end of the tax year if I wanted to withdraw some more cash from my company but it should be noted that this does not save any tax, it just defers it until the following tax year.
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I think you do need to speak to your accountant before you do anything, getting the right salary can save you quite a bit of cash, also be wary of loans etc as this can get messy.
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Originally posted by Kugel View PostIf you need money, take directors loan.
I was always one for overdrawing the DLA at the end of the tax year if I wanted to withdraw some more cash from my company but it should be noted that this does not save any tax, it just defers it until the following tax year.
Whether this will make you better or worse off will depend on whether tax rates are going up or down or if you are trying to skirt around the higher rate tax band. Watch out for the pitfalls too!
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Do not take any salary or dividends this tax year. If you need money, take directors loan.
Additionally, do your self assessment tax return for 2011-12 as soon as possible so you get overpaid tax refunded early.
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Originally posted by topper View PostSorry, Yes accountant all sorted, and I did email them Saturday, just thought I would throw it out there, and shamelessly get my post count going.
There are some on here that show little tolerance towards people asking questions that their Accountant would be able to answer in a second - the same questions pop up again and again and again. I was in a chilled out mood though.
One thing that you will need to quickly get your head around is that now you are in control of when and how you pay yourself that gives you more opportunities to be tax efficient than you are used to.
Accountants can vary - some will be very proactive and some will just answer the questions that you ask them. Others still will have done all the proactive thinking on your behalf and are just not very good at communicating that so you still have to ask.
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A very good question, I'm in the same boat.
I have just asked my accountant for advice.
I'll let you know what he says (unless he also posts on here to answer).
Gaz
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Originally posted by Gonzo View PostOK, I'll say it.
You have got an accountant sorted out haven't you? You could try asking them.
I expect that they would advise you that there is no value in taking any money as PAYE for the rest of this tax year but when the new tax year starts then it will be worthwhile running a payroll.
The P45 won't be relevant then because they are used so that a new employer deducts the right amount of tax when you change employer mid tax year.
Thanks for the info, makes sense.
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