IR35 paying out salary at end of year

[psychocandy]

FAO Mods: this guy is being rude to me, how rude am I allowed to be to him?

thats quite tame for NLUK. Should see what he says to me!

[expat]

You 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.

Thanks.

[Craig at Nixon Williams]

Ah. 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?

You 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.

[northernladuk]

Can we not just reply with this smilie from now on?

[TheCyclingProgrammer]

Coming up to company year end, is it possible to calculate future salaries? Does that reduce profit in this year?

Expenses generally reduce the profit in the year in which they are incurred (on an accrual basis).

[expat]

Come, you were tempted to say something else weren't you hey... come on, admit it.

FAO Mods: this guy is being rude to me, how rude am I allowed to be to him?

[expat]

Not true at all.

For example you could calculate the salary at the end of the year and not actually pay it out.

Ah. 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?

[TheCyclingProgrammer]

Can we not just reply with this smilie from now on?

[northernladuk]

Not true at all.

For example you could calculate the salary at the end of the year and not actually pay it out.

Come, you were tempted to say something else weren't you hey... come on, admit it.

[Craig at Nixon Williams]

Not true at all.

For example you could calculate the salary at the end of the year and not actually pay it out.

[expat]

Jesus wept!

Shorthand for 3 of the 4 caveats?

[northernladuk]

Jesus wept!

[expat]

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)