Reply to: Contract inside IR35 and permie at the same time

[lucyclarityumbrella]

Are you all saying it is not right to have 2 jobs i.e. Permie+contract combo at the same time?. What if he said he was doing the contract outside of permie working hours?

We have contractors doing just that, but their primary employer has no issue with it. From a tax perspective, you would simply complete the starter checklist stating you have other PAYE employment, which would put you on a BR tax code with the brolly (all at 20%), so you would just have to be aware that there is always going to be a potential of having to sort out some unpaid taxes via self assessment.

[ladymuck]

You can't fire yourself as you were never employed. You will still stay an office holder of your company with all it's responsibilities, you just won't be on the PAYE scheme. All the P45 does is detail the pay for the year to cover the finances for tax purposes, nothing to do with your employment(which you aren't anyway).

^ this

You're simply stopping a payroll scheme and issuing the legally required paperwork as a result.

The alternative is that you pay at BR rate of tax and have to claim it back at the end of the year.

I know which I'd prefer to do.

[northernladuk]

P45 it is then. I can't believe I have to fire myself.

You can't fire yourself as you were never employed. You will still stay an office holder of your company with all it's responsibilities, you just won't be on the PAYE scheme. All the P45 does is detail the pay for the year to cover the finances for tax purposes, nothing to do with your employment(which you aren't anyway).

[css_jay99]

You can close down your company's payroll and issue a P45 without closing down your Ltd Co. It's not difficult.

https://www.gov.uk/stop-employing-staff

And actually carrying it out in Sage seems pretty straightforward
https://my.sage.co.uk/public/help/as...rticleid=36284

P45 it is then. I can't believe I have to fire myself.

[northernladuk]

You can close down your company's payroll and issue a P45 without closing down your Ltd Co. It's not difficult.

https://www.gov.uk/stop-employing-staff

And actually carrying it out in Sage seems pretty straightforward
https://my.sage.co.uk/public/help/as...rticleid=36284

[ladymuck]

I'll check with the UC regarding the P45. Doing my own accounts. I would rather keep Ltd Co. going for at least dividend distribution so I can push more of the UC's income into pension. Also gives me some time for now to re-evaluate the my future in contracting.

You can close down your company's payroll and issue a P45 without closing down your Ltd Co. It's not difficult.

https://www.gov.uk/stop-employing-staff

[eek]

Out of interest which umbrellas do allow salary sacrifice into
a) A pension scheme of their choosing (which may subsequently cost to transfer it where you really want it)

b) A pension of your own choosing.

A friend still contracting and now IR35'd couldn't find any that met his requirements.

That friend wasn't asking the correct question.

However, clarity does so that is what we would recommend.

We've covered this question an awful lot in the past so just check other posts in the umbrella forum / channel.

[ASB]

Out of interest which umbrellas do allow salary sacrifice into
a) A pension scheme of their choosing (which may subsequently cost to transfer it where you really want it)

b) A pension of your own choosing.

A friend still contracting and now IR35'd couldn't find any that met his requirements.

[eek]

he brolly may not allow this and may insist on you making net payments saving no NI.

The the brolly doesn't offer Salary sacrifice - find another brolly. sending everything (well except minimum wage and the umbrella's fee) received via Salary Sacrifice into a pension is the sole advantage umbrellas have over agency payroll..

[ASB]

You can't "make" your co dormant. If it so happens that a company was dormant then dormant accounts may be filed.

Your co won't be if it has any substantive transactions during its AP. From your description it will.

Think carefully about the mechanics of pension if you go that route.

Your co can make gross contributions into your current pension. Saves 2 lots of NI. The brolly may not allow this and may insist on you making net payments saving no NI.

They should not operate a tax code on your say so. It should be obtained via a P46 and should be 0T. As you say any mess should get resolved via SATR. You can ask HMRC to allocate you tax code differently. Egvyou could nominate UC as the main job to get you tax code on that and yourco as the second job and get the tax code on that. Or split however you want. Whether there is any point merely depends on whether yourco is paying you salary going forwards.

The NI position is more complex. As EEk posted NI will be operated twice which can lead to paying the nominal maximum.

It used to be the case that you could appeal and get a refund of the excess. I do not know if this is still the case.

However it is possible to have your NI defered if you gave 2 jobs and anticipate paying too much.

https://www.gov.uk/defer-national-insurance

[css_jay99]

Have you asked them? They must get asked this by every single contractor so give them the option and see what they say.


Yes you can do that, or you can make it dormant. As long as you don't MVL you might even want to shut it down and start a fresh after the inside gig. Depends on your situation.

You doing your own accounts?

I'll check with the UC regarding the P45. Doing my own accounts. I would rather keep Ltd Co. going for at least dividend distribution so I can push more of the UC's income into pension. Also gives me some time for now to re-evaluate the my future in contracting.

[northernladuk]

Are you all saying it is not right to have 2 jobs i.e. Permie+contract combo at the same time?. What if he said he was doing the contract outside of permie working hours?

It really depends on the situation but contracts that can be done out of hours are pretty uncommon and this being inside means it's likely to be even more restrictive than an outside one. They want a bum on seat permatractor to do with as they please. That's about as far from being able to work outside client time as it gets. If the contract stipulates working times, which an inside one is most likely to do, then it's a no go. You'll be in breach of both engagements doing work on the other ones time.

If you can't tell both the employer and the client what you are doing there is a good chance you are doing something wrong. It's better to assume any gig must be done in working hours than out. As I say, they are pretty rare and most certainly won't be inside.

My other question is around P45. Having signed up with an UC, I have been asked to provide a P45. My Ltd Co uses SageOne for Payroll. Do I really need to be issuing a P45 or just give them my tax code after-all Self Assessment will resolve tax discrepancies?

Have you asked them? They must get asked this by every single contractor so give them the option and see what they say.

Also during inside IR35 contracts, should Ltd co. just keep processing zero payroll/EPS?.

Yes you can do that, or you can make it dormant. As long as you don't MVL you might even want to shut it down and start a fresh after the inside gig. Depends on your situation.

You doing your own accounts?

[css_jay99]

Since I have slightly similar questions, I thought best to ask here rather than creating a new thread...

Are you all saying it is not right to have 2 jobs i.e. Permie+contract combo at the same time?. What if he said he was doing the contract outside of permie working hours?


My other question is around P45. Having signed up with an UC, I have been asked to provide a P45. My Ltd Co uses SageOne for Payroll. Do I really need to be issuing a P45 or just give them my tax code after-all Self Assessment will resolve tax discrepancies?

Also during inside IR35 contracts, should Ltd co. just keep processing zero payroll/EPS?.

[northernladuk]

Hi

I am currently doing a Permanent job through a company and don't intend to leave it.
I have been made an insider offer to join back my previous company as a contractor within IR35 through an Umbrella company for a 3 months duration. The company hiring me as contractor will only do so through an Umbrella company not otherwise.

At the same time I don't want to leave my current Permanent job. There isn't much work within my current permanent position and I can easily manage both the work at the same time and different hrs.

Question is -

1) Is there any problems doing this?
2) How do I manage if the Umbrella company asks for a P45? I cannot provide one... just just give P46 instead ?
3) I am happy to pay any taxes...do someone in this position envisage any other issue?

Not a chance this is going to work. If you are being paid full time at your employer and you have spare time then they will expect you to fill it. The situation is you are underused and are coasting but you are still expected to work for them full time. It's in your contract of employment. 9 - 5 for 5 days a week you are theirs. Doing work for another employer will breach your contract. The same will be said for the new employer.

No way either of them will be happy with this and they will find out. If you can't tell either employer about this then you are doing something wrong.

[eek]

So you will have 2 companies who expect you to act as an employee - that to me would be a no.

You also have the risk that your permanent job as a veto on external work - so that could be instant dismissal if found out.

But the tax bit is only an issue if you need the money up front - if you throw it into your pension via salary sacrifice (you can put £40,000 a year into it) that will allow you to retire either earlier or with more cash later.