Reply to: Help with tax please

[malvolio]

Nope, not interested. Effects are more relevant than causes. The background to the legislation is hopelessly more complicated than a single regulation and goes back to before 1978.

[northernladuk]

[eek]

That is incorrect in so many ways I don't know where to begin.

It matters not why the legislation came into being (IR35 stems from the same lack of knowledge of business reality), the effect is as stated. 99% of agencies and clients will both insist on using intermediaries to avoid liability for taxation and employment rights. That they are wrong is irrelevant.

Actually that just shows how much you are wrong (and why you are always continually wrong). History is important as it explains how come we ended up with service companies in the first place and why we ended up with the current IR35 mess.

I notice that an element of being caught out has crept into your thoughts. You started with an absolute statement yet you are now down to 99%. Are you sure you're cut out for arguing against someone who actually knows and can read the law?

[malvolio]

That is incorrect in so many ways I don't know where to begin.

However, the reason why self employed via agencies is banned is to avoid workers being abused and forced to work as self employed rather than as employed. See Employment Protection (Consolidation) Act 1978 for the details. The Hansard debates around the act make for interesting and scary reading considering the world at the time....

That is incorrect in so many ways I don't know where to begin.

It matters not why the legislation came into being (IR35 stems from the same lack of knowledge of business reality), the effect is as stated. 99% of agencies and clients will both insist on using intermediaries to avoid liability for taxation and employment rights. That they are wrong is irrelevant.

[eek]

Nope, it's all to do with who is going to get sued for unpaid taxes. The liability passes up the chain away from the worker to the next incorporated entity in the chain (the underlying assumption being that an individual worker can't pay his own taxes unaided so will either forget paying them or ignore doing so.). YourCo or the umbrella fill the same purpose in that context, they are the intermediary that safeguards the agency, or the end client if you're direct. Hence, you can't do it as a Schedule D self-employed worker.

That is incorrect in so many ways I don't know where to begin.

However, the reason why self employed via agencies is banned is to avoid workers being abused and forced to work as self employed rather than as employed. See Employment Protection (Consolidation) Act 1978 for the details. The Hansard debates around the act make for interesting and scary reading considering the world at the time....

[malvolio]

Didn't OP say he is a through an agency so the Self Employed option won't fly.

Nope, it's all to do with who is going to get sued for unpaid taxes. The liability passes up the chain away from the worker to the next incorporated entity in the chain (the underlying assumption being that an individual worker can't pay his own taxes unaided so will either forget paying them or ignore doing so.). YourCo or the umbrella fill the same purpose in that context, they are the intermediary that safeguards the agency, or the end client if you're direct. Hence, you can't do it as a Schedule D self-employed worker.

[LisaContractorUmbrella]

WNLUKS - if the OP is working through an agency he won't be permitted to work as a sole trader

[northernladuk]

No doubt umbrella companies like to use IR35 as a marketing tool but I have always considered the "service" is the ability to contract with an employer/agency that will only do business with a Ltd Co. and even if that's all they do it's still a service - the OP would not have a contract otherwise.

If it really is the case that the OP is being paid gross then would he be better off declaring himself self-employed? More favourable tax position than PAYE, and less hassle than running a Ltd Co. ?

Didn't OP say he is a through an agency so the Self Employed option won't fly.

[Contreras]

First things first - leave the umbrella company that you are with - they are taking money from you for nothing! They have taken a cut of the contract and left you to sort out your own tax - an umbrella company's role is to account for your tax through PAYE. Secondly have a read up on IR35 and see what your status is likely to be - there are financial benefits to working through your own Ltd Co if you are outside IR35 but, if you are inside, your tax will be payable through PAYE regardless of whether you have your own company or work with an umbrella company.

No doubt umbrella companies like to use IR35 as a marketing tool but I have always considered the "service" is the ability to contract with an employer/agency that will only do business with a Ltd Co. and even if that's all they do it's still a service - the OP would not have a contract otherwise.

If it really is the case that the OP is being paid gross then would he be better off declaring himself self-employed? More favourable tax position than PAYE, and less hassle than running a Ltd Co. ?

[LisaContractorUmbrella]

Hi sorry if I haven't been to clear , they take a cut and pay me gross I only had 3 weeks work on this particular job. I am constantly in and out of work and I always sign on between as it is my proof of whereabouts for my security vetting, I just want to know what are the benefits of having a ltd company and how do go about paying NI , and what things can I claim for to reduce my tax bill , I work away from home and use my own transport daily for work , maybe there was a misunderstanding and the thought I already have a ltd company , can u have a Ltd company and still claim jsa while out of work ?

First things first - leave the umbrella company that you are with - they are taking money from you for nothing! They have taken a cut of the contract and left you to sort out your own tax - an umbrella company's role is to account for your tax through PAYE. Secondly have a read up on IR35 and see what your status is likely to be - there are financial benefits to working through your own Ltd Co if you are outside IR35 but, if you are inside, your tax will be payable through PAYE regardless of whether you have your own company or work with an umbrella company. You may be entitled to claim tax relief on your travel costs and other things whether you work through a Ltd or an umbrella - there are quite a few guides on here that will give you an insight into what can and cannot be claimed and under what circumstances.

With regard to JSA, I am not 100% sure if you would be entitled but don't you have to be 'available for work'? If that is the case then I am not sure you would be able to make that claim as you would be running a business.

[LisaContractorUmbrella]

That umbrella is fine, the owner of the company however is decidedly dodgy.

And her brother even worse

[Brussels Slumdog]

Hi sorry if I haven't been to clear , they take a cut and pay me gross I only had 3 weeks work on this particular job. I am constantly in and out of work and I always sign on between as it is my proof of whereabouts for my security vetting, I just want to know what are the benefits of having a ltd company and how do go about paying NI , and what things can I claim for to reduce my tax bill , I work away from home and use my own transport daily for work , maybe there was a misunderstanding and the thought I already have a ltd company , can u have a Ltd company and still claim jsa while out of work ?

An umbrella company is ideal for 3 weeks work as I have used an umbrella in the UK for 2 weeks work but then Ive used the same brolly for a years work. Umbrella companies charge by the week and not by the month as on the continent.

[ajk]

Hi sorry if I haven't been to clear , they take a cut and pay me gross I only had 3 weeks work on this particular job. I am constantly in and out of work and I always sign on between as it is my proof of whereabouts for my security vetting, I just want to know what are the benefits of having a ltd company and how do go about paying NI , and what things can I claim for to reduce my tax bill , I work away from home and use my own transport daily for work , maybe there was a misunderstanding and the thought I already have a ltd company , can u have a Ltd company and still claim jsa while out of work ?

[eek]

I can think of at least one NLUK

That umbrella is fine, the owner of the company however is decidedly dodgy.

And her brother even worse

[LisaContractorUmbrella]

You mean there are some that aren't?

I can think of at least one NLUK