Question regarding Self-Assessment

houmie

Hi,

I have started an Ltd in March 2011 and am now contracting for my own Ltd company.

HMRC asked me to do a Self Assessment for 2010/11.

The online form asks me

"If you were an employee, director, office holder or agency worker, do you need to complete the employment section?"

YES (I had a former employer plus being a director of my new company)

Then it would ask for the name of the employer. So far so good.

But then it would ask again, if I was self-employed and how many self-employed businesses did I have.

Now does my directorship of my own company puts me into the first or second section? Its quite confusing..

Thanks,

anniecave

Do you mean you are contracting "by having" your own limited company? eg you are working for a client/customer and you invoice the client via the limited company? And you are either an employee or a director or both of that limited company?

If you are an employee of your limited company, then yes you have two separate sets of employement (assuming you worked via your limited company in the relevant tax year). One set as an employee previously. Then another employment via your limited company. So you would need to include the relevant employment details.

If however you are taking dividends as a director, then this isn't employment, but it would count taxable income and you would need to enter yes to the question about dividends in the first section (tailoring your return) then also answer the questions about your dividends in the main section (filling in your return) under dividends.

houmie

Thanks for your reply.

anniecave wrote: »

Do you mean you are contracting "by having" your own limited company? eg you are working for a client/customer and you invoice the client via the limited company? And you are either an employee or a director or both of that limited company?

yes, I do have my own limited company and am working for a client, whom I am invoicing for my services via the limited company. I would be a director of my company, who would get a salary and a dividend.

If you are an employee of your limited company, then yes you have two separate sets of employement (assuming you worked via your limited company in the relevant tax year).

I started trading with the new ltd company after 5th April 2011, hence there was no income yet from this company. But since it was incorporated, I still need to declare the status of having two employments I suppose.

One set as an employee previously. Then another employment via your limited company. So you would need to include the relevant employment details.

If however you are taking dividends as a director, then this isn't employment, but it would count taxable income and you would need to enter yes to the question about dividends in the first section (tailoring your return) then also answer the questions about your dividends in the main section (filling in your return) under dividends.

Dividends were paid in after 5th April 2011, so that would be then for next year.

Therefore by the look of it, I don't have to fill the self-employment section at all. Its good that I checked here first.

Many Thanks,

agrinnall

Assuming that as well as being director of your limited company you are also an employee (which is how it normally worked in my contracting days) then you are not self employed so you should answer no to the second question.

pjclar02

A director is indeed an officer of the company, and you are essentially treated as an employee of the company for the purpose of preparing the self-assessment tax return so you do need to report your earnings as a director in the employment pages.

Even though you have not drawn a salary in 2010/11, I would complete an employment page for your directorship. Tick the box stating that you are a director - and you probably also need to tick the box saying that it is a close company.

If you have registered the company for PAYE, then you will have to enter the PAYE reference number also. If not, then you will need to register if you want to pay yourself a salary of c7k in 2011/12 and to ensure you get your state pension entitlements.

Just to clarify the point made above, you do not have an entitlement to dividends by being a company director - you receive dividends in your capacity as a shareholder of the company.

Hope this helps.