Originally posted by expat
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Reply to: IR35 paying out salary at end of year
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Previously on "IR35 paying out salary at end of year"
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Originally posted by Craig at Nixon Williams View PostYou need to calculate the salary at the end of the year and pay the tax. There is no actual requirement to actually make payment for the salary. The salary is calculated based on the invoices that have actually been paid during the year.
As far as the accounts go, you should accrue the deemed salary and employers NI due on the invoices that have been included in the accounts. If this is done correctly then the profit in the accounts will be 5% of turnover minus non-qualifying expenses.
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Originally posted by expat View PostAh. Good point. So it is not literally necessary to empty the bank account, but the point is the same, calculate salary (and pay tax).
Coming up to company year end, is it possible to calculate future salaries? Does that reduce profit in this year?
As far as the accounts go, you should accrue the deemed salary and employers NI due on the invoices that have been included in the accounts. If this is done correctly then the profit in the accounts will be 5% of turnover minus non-qualifying expenses.
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Originally posted by TheCyclingProgrammer View PostCan we not just reply with this smilie from now on?
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Originally posted by expat View PostComing up to company year end, is it possible to calculate future salaries? Does that reduce profit in this year?
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Originally posted by Craig at Nixon Williams View PostNot true at all.
For example you could calculate the salary at the end of the year and not actually pay it out.
Coming up to company year end, is it possible to calculate future salaries? Does that reduce profit in this year?
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Originally posted by Craig at Nixon Williams View PostNot true at all.
For example you could calculate the salary at the end of the year and not actually pay it out.
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Not true at all.
For example you could calculate the salary at the end of the year and not actually pay it out.
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IR35 paying out salary at end of year
Is it true that if you are working inside IR35, you basically need to empty out the company bank account not once but twice a year?
Firstly before tax year end, because the deemed payment calculation is a personal one so you will end up paying tax+NIC on the income to that date, and then again when you actually pay it out;
Secondly before company year end, because if you have any money left then it will be profit and due for CT, but that won't affect the next deemed payment calculation so you will pay tax+NIC on it as well.
I know:
"why are you paying a voluntary tax?"
"what does your accountant say?"
"do you know how to use the search function?"
"are you sure you're cut out for contracting?"
(don't want the hassle, I'm about to ask, yes, and no but I haven't found anything better)Last edited by expat; 18 March 2014, 12:46.Tags: None
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