Going from PAYE to Ltd. Co.

sunflowersuffolk

My husband was with Brooksons composite, and they are now pushing him to become a Ltd Company through them. However they are quoting £34 per week for the service. Why is this so much more than you are paying, £26 is much more attractive. We are in East Anglia.
He is thinking of getting his own Ltd Company and accountant instead, but Brooksons say they have insurance for IR35 problems, not sure which is best to do and running out of time to decide. Any advice would be welcomed.

mutley74

sunflowersuffolk wrote: »

My husband was with Brooksons composite, and they are now pushing him to become a Ltd Company through them. However they are quoting £34 per week for the service. Why is this so much more than you are paying, £26 is much more attractive. We are in East Anglia.
He is thinking of getting his own Ltd Company and accountant instead, but Brooksons say they have insurance for IR35 problems, not sure which is best to do and running out of time to decide. Any advice would be welcomed.

I am in the same situation, along with many friends at work who also work via Brooksons. Decided to stick with Brooksons with the new changes. They say i will earn more money being a director than previously as a employee of a composite.
They charge the extra to make the £34 as they have to cover the accountancy fees to do each LTD co's accounts for formal completion.
I will stick with Brookson for a few months and see how it goes, i see it less hassle going through them than doing it alone. At least they can do most of my admin work and are available should i need any help.

kai666

I set up a limited company through Charterhouse plc a few weeks ago. While I do take home more money, they never seem to listen to what I want.

It maybe because I don't/didn't fully understand how the whole thing works, not coming from a business background, but I want to pay national insurance. It means I pay more tax than I might have too, but I want a pension when I hit 65!

I started off paying myself completely in dividends , and so no NI payments. Didn't realise this for a few weeks, so asked for it to be changed, so I was paid enough to make NI payments, and the rest in dividends.

So they changed it so I get paid the equivalent of £2.97 an hour, which apparently is the most tax efficient way of increasing your take home pay, but means I still don't pay any NI!! While not paying any NI is great for all the Aussie's and South Africians their website seems to appeal for, not so great for those people who will still be in 30 odd years time needing something to live on!

So another premium rate phone call to sort it out.

I'll give them a few more weeks and then drop them like a hot potato if things don't improve

h4nym

RayWolfe wrote: »

Well if you're little company is only in existence to avoid tax that the rest of us will have to pay extra to subsidise, I hope he does.
If, on the other hand you have set up some enterprise to make goods or supply a service that has a chance of blooming into a worthwhile company employing people and paying tax, then I hope he doesn't.

Ray

You've obviously bought the Blair Brown Bullsh*t hook, line and sinker!

Just remember every time you see a shiny new hospital wing being crowed about by some Labour crony, that the PFI deal that the government will have done to buy the headline will take us taxpayers another 20 years to repay the construction company three times what they could reasonably expect any other customer to pay. There's only 50 billion quid in PFI contracts - no drain on the future then!

That, however, pales into insignificance when compared to the Public Sector Pensions Deficit - the biggest threat facing taxpayers. When this government caved in to their union paymasters over public sector pensions in 2005, they foisted a liability of 700 billion quid on the taxpayers of the next 40 years. 700 BILLION pounds - that's THIRTY THOUSAND POUNDS PER HOUSEHOLD that we get to pay for the next 40 years to pay for the excesses of this government. Not to mention, of course, the fact that our pensions - from which we get to pay this bill - have been decimated by Brown's 5 billion pound ongoing smash and grab on our pensions.

So - I hope that gives you food for thought on the tax side.

Now onto your panacea - that this company grows, employs people and pays lots of lovely tax. Well I started my company 20 years ago in much the same way as the OP, and with many of the same hopes. My company did indeed flourish - peaking at employing 27 staff in 2001. Then Brown put employers' National Insurance up and bound us all up in all the red tape. I now employ just 3 staff in the UK, and have most of my operations abroad - employing more than 50. And guess what, I'm also building a villa there so I can leave this shower of charlatans behind as soon as I sell the firm. Just waiting for my daughter to finish her education in about 10 years time. And before you ask, even though I don't get any reduction in my tax, I pay for her education directly - I want her to have one.

No sir - don't buy the bullsh*t - study the facts and then decide that we're getting value for OUR money.

H

PoorDave

albertross wrote: »

Insurance for IR35 problems may cover accountancy costs, but I doubt it will cover your tax bill if you should be paying paye/ni on 95% of turnover. If IR35 does apply, then running a Ltd company is a big headache with no benefits.

If I recall correctly, they still haven't made a single IR35 case stick, to the point where it's proved that the tax should have been paid, and thus made the individual(s) involved pay up. So until the authorities get a better scoreline, we'll all just carry on paying lower rates of tax!

It's up to those within the company that may be liable to IR35 to be able to confidently explain why the legislation doesn't apply, then you should be safe. Also, IR35 "insurance" is worthless, as it seems to only cover against ramifications of IR35, not any similarly motivated, but differently named piece of legislation!

RayWolfe

h4nym wrote: »

You've obviously bought the Blair Brown Bullsh*t hook, line and sinker!

Gosh! You are a clever boy.
I hope you will be continue to be very happy. If by any chance you're not, it will be because you've forgotten to take your medication, so that's easily sorted.
Bye

PoorDave

albertross wrote: »

With a means tester in power, I wouldn't assume you will get a pension when you hit 65, or 70 however much NI you pay. Even if you do, it will probably only just cover your council tax the way things are going.

Re Ir35.. http://news.bbc.co.uk/2/hi/business/2896929.stm

Fair point, but the article you link to only seems to show the results of the appeal against this piece of HMRC's legislation with respect to it's incompatability with the human rights laws. That's not the issue here, is it?

It's exploitation of a grey area in the rules, whereby as long as you can show you would not otherwise be an employee of the company you are doing ""the work" for if your own Ltd company was removed, you're OK. Allegedly!

Alleycat

I'm glad to see this thread as I've got some questions that hopefully you knowledgable people may know the answers to. I'll apologise now for being a complete novice and will need any explanations in reaaally simple terms!

Anyway, I'm going to be going from a salaried job to agency work and have had it suggested to me to work via a Limited Company in order to receive a higher hourly rate and more take home pay. From what I understand, managed limited companies is/was the easiest way to do this, but is being outlawed by the Chancellor in April. Therefore my options are to be PAYE and under an umbrella organisation (?) or set up my own Ltd company and do the books myself. These companies that you have spoken of, e.g. Brooksons and Charterhouse, how do they work and is this something I could/should do?

mutley74

Options I see you have are:

- stay as PAYE. Where you pay normal rate of income tax and Ni on all your earnings.

- an umbrella company if you are regarded as an employee by IR35.

- You are right the evil tax man is clamping down on agency workers being able to work as a employee of a LTD and claim a basic min. wage and then dividends. Thus saving out from paying NI and tax on all the amount.

- Now instead dof doing above one has to form there own LTD co and become a director of their own LTD co. They can then claim a basic directors pay and rest as dividends.

Brooksons – going through a company as Brookson, you pay them a monthly fee in return they do all the admin necessary to cover your Ltd company expenses such as registration; accountancy and banking fees. Brookson have started to offer various insurance schemes such as death cover etc included their weekly fee.

Alleycat

atpug wrote: »

Options I see you have are:

- stay as PAYE. Where you pay normal rate of income tax and Ni on all your earnings.

- an umbrella company if you are regarded as an employee by IR35.

- You are right the evil tax man is clamping down on agency workers being able to work as a employee of a LTD and claim a basic min. wage and then dividends. Thus saving out from paying NI and tax on all the amount.

- Now instead dof doing above one has to form there own LTD co and become a director of their own LTD co. They can then claim a basic directors pay and rest as dividends.

Brooksons – going through a company as Brookson, you pay them a monthly fee in return they do all the admin necessary to cover your Ltd company expenses such as registration; accountancy and banking fees. Brookson have started to offer various insurance schemes such as death cover etc included their weekly fee.

Bless ya! That makes sense. My concern though is how to work out if I will be better off financially paying a monthly fee and forming my own Ltd company. I worry that the fee could wipe out any potential savings I could make in tax and national insurance.

Sorry another question as well. If I set up as a Ltd Company do I still pay NI contributions? I would assume I do. If not am I able to pay them myself?