Temporary Worker - setting a Limited Company

Shehzad

Hi,

Im a temp staff in a financial organisation. Ive been in contact with a group who is willing to set me up a limited company, (They take 4.5%) and do all my tax...etc. And i will save from a tax loop hole of some sort. Can anyone help me as Im not sure whether its a good idea or not.

Anyone else do the same?

The group said that i would save approx £60 a week.

Any thoughts would be great.

Tallymanjohn

LGV drivers have been doing this for a while using umbrella companies like NOVA & Madison. Unfortunately, the chancellor is planning to tighten up the rules on these sort of schemes so be very careful, especially as you'll be relying on them to sort out your tax etc. - if they don't do it properly then it's you that's liable.

Three_Dancing_Dragons

If you are a temporary worker with an agency who are paid by the financial organisation then you should already have good workers rights (including holiday pay/sick leave etc) as a PAYE employee of the agency. Why surrender these to go self employed and incur extra expenses.

If this is just a way for the financial organisation to avoid paying the agency a 'finders fee' for putting you into the job permanently it wont work. The agency can definitely sue them and possibly you depending on what contract you signed when you signed up with the agency.

Rules and loopholes change all the time. Don't take anyone's word for what they can do for you until you've checked the details with a solicitor who specialises in tax and self employment. One can confirm or deny pretty fast.

Shehzad

The sick pay and holiday pay is included in my hourly wage. i.e. I only get paid for the days i work.

Im doing this, as i am told it will save me money on tax as i am not a perm employee i am already paying too much.

Anyone else got more info? Thanks for the above posts!!!

Astaroth

There are, and always will be, may loopholes and ways to legally manipulate your tax liability which is even more true if you have a limited company. When I went on my finance course (which was aimed at those not in a finance type job so no asking for advice or specifics our trainer did recommend that everyone formed their own ltd company and bill their employers for the work rather than being a direct employee as in his professional opinion as a chartered accountant was that the savings were that sufficient - of cause the majority of employers wouldnt go for this)

Certainly look at the fees they charge though... setting up a limited company can be done through a company like quickformations for under £50 and as long as you keep your books in good order an accountant really shouldnt charge that much to ensure you are legally minimising your liabilities. Umbrella companies are often reliant on people either being lazy or not realising that these things are actually fairly easy to do yourself.... tax though is a complicated field and a good accountant will almost always save you more money than their fees are.

Shehzad

They want to charge me 4.5% of all my gross earnings.

Shehzad

I finally got more information on this.

What they do it take my GROSS pay. Split it into two.

One portion (25%), they pay me as wages. Paying NI and tax...etc.

2nd portion (75%) I pay as Dividends, hence only paying 19% tax. This saves me a little on tax each week.

I can also claim back expenses...etc.

Anyone can give me any tips?

devizes18193

https://www.contractor.co.uk for tips