Help, Ltd company and PAYE

alan_blue

Hello there, i have a question that is becoming harder by the day lol

I am working on a salary on £30970 at the moment and paying PAYE. I have 5 months off work on leave ect and am in the process of setting up my ltd company to begin contracting work. My question is what kind of tax will i pay as i will be earning my salary for the 5 months plus any work i get as a ltd company. I am expecting a full time wage as the company anyway.

thanks in advance

fengirl_2

Any money you draw from your Ltd co will need to have tax deducted under PAYE, exactly like in your present job. You will deduct tax at basic rate from your salary as your mian job uses all your allowances, but you will need to be aware that you may be a higher rate taxpayer and take advice from HMRC, depending on your salary.

Pennywise

fengirl wrote: »

Any money you draw from your Ltd co will need to have tax deducted under PAYE, exactly like in your present job. You will deduct tax at basic rate from your salary as your mian job uses all your allowances, but you will need to be aware that you may be a higher rate taxpayer and take advice from HMRC, depending on your salary.

I disagree. If your company is making a profit, you can pay dividends instead, thus saving over 20% in national insurance payments that you'd be paying if you paid yourself a salary. There is absolutely nothing in law requiring you to take monies from your company as salary unless you are caught by IR35, and few people are. I'd really have to recommend you take advice from an accountant - you'll need one anyway to do the year end stuff, so you may as well get it sorted at this early stage to make sure you're not missing any tricks and paying too much tax.

alan_blue

thanks for the advice peeps, spoke with my accountant today and he says i will just get taxed a 21% on the earnings that the company takes