Going from PAYE to Ltd. Co.

mutley74

Alleycat wrote: »

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?

You need to make an estimate of all the costs and admin work you will need to do to set up your own Ltd company. Then make a list of the costs from say using Brooksons and the potential savings, and compare what best fits your lifestyle. (ring them and ask for a free quotation). Note you only pay the weekly fee for weeks youre working and getting paid.

I prefer Brooksons as they do all my admin work and set up my Ltd company (and current composite for me). All i have do is submit my hours each week and expenses and sit back. They do the rest including a free tax self-assessment (as long as you have no other complex income issues). Also they can pay me SSP and now offer various insurance schemes all inclusive of the wekly fee. I have been with them for 3 years and definitely see a massive benefit compared to being PAYE with my agency. Probably improve my pay around 15-20%.
you make the savings i.e. improved income from paying a lower rate of NI.
hope this helps

Alleycat

Thanks again for your help and advice. I was originally referred to Giant by a friend of mine but when I contacted them about setting up a limited co they said they weren't doing it anymore due to the changes the chancellor is bringing in. They therefore suggested I go PAYE and work under their umbrella services rather than setting up my own Ltd co as all the paperwork I would have to do would be enormous. I think I'll look into Brooksons.

Thanks.

shockingmoment

Alleycat wrote: »

I think I'll look into Brooksons.

Thanks.

Go ltd. Big benefits.

Try a local, small, work from home accountant. Much cheaper, 'proper' accounts, audited etc. Mine charges £500pa. Very professional, v. friendly, retired.

No overheads so costs are low.

Alleycat

shockingmoment wrote: »

Go ltd. Big benefits.

Try a local, small, work from home accountant. Much cheaper, 'proper' accounts, audited etc. Mine charges £500pa. Very professional, v. friendly, retired.

No overheads so costs are low.

Another interesting option! Would it be sensible for a complete novice though? I don't want to make any mistakes and get stung.

Also now confused about whether I would fall in or outside of IR35. Not too sure what it is and have had a read on the HMRC site. I'll be working as a Homelessness Officer on temporary contracts found for me by a recruitment agency.

Timmne

shockingmoment wrote: »

Go ltd. Big benefits.

Try a local, small, work from home accountant. Much cheaper, 'proper' accounts, audited etc. Mine charges £500pa. Very professional, v. friendly, retired.

No overheads so costs are low.

Just be wary of this though - I know a few front bedroom accountants and they're all slightly rough around the edges on policies, conventions, new finance acts etc etc. This is probably due to them not making enough profit/being too greedy to go on the necessary courses.

We bill clients anywhere from £300-£25000 a year but we always ensure that they know that they've saved more in tax & other areas than they've paid us.

In my experience the front bedroom accountants aren't a lot more than bookkeepers and their service is purely to prepare accounts and not to give you the advice you might need.

Choosing an accountant based purely on cost is not the way to do it at all. Last week I saved a client £2,800 in tax by adjusting their salary/dividend split that their old accountant had never thought of. If this had been considered in prior years they could have saved tens of thousands!

Just my little bit of advice!

WHA

There are A LOT of specialist accountants for contract and agency workers - typical price range is £60 to £80 per month for EVERYTHING, including company formation, book-keeping, payroll, VAT returns, opening a bank account, personal tax returns, etc etc. The way most work is that the worker has to do little other than sign a few forms, write a few cheques and prepare their own expenses claim for travelling, mobile phone, meals, etc.

The worker is effectively "spoon fed" with everything they need to do by the accountant. This system is completely different from managed service companies as the worker themselves is the director and shareholder so they are in control, and the accountant's role is purely support.

We're not talking about "spare bedroom" types either, most of the popular firms are properly qualified and regulated chartered or certified accountants or chartered tax advisers. Whilst "spare bedroom" types could potentially create problems if they are not properly up to date, so too could the typical High Street practices who are unlikely to specialise in agency workers - I know of one local High Street practice who even to this day are advising small company directors to pay everything out in salary and not pay any dividends "just in case" the tax inspector opens an enquiry - talk about rolling-over and playing dead!!

shockingmoment

Timmne wrote: »

Just be wary of this though - I know a few front bedroom accountants and they're all slightly rough around the edges on policies, conventions, new finance acts etc etc. This is probably due to them not making enough profit/being too greedy to go on the necessary courses.

We bill clients anywhere from £300-£25000 a year but we always ensure that they know that they've saved more in tax & other areas than they've paid us.

In my experience the front bedroom accountants aren't a lot more than bookkeepers and their service is purely to prepare accounts and not to give you the advice you might need.

Choosing an accountant based purely on cost is not the way to do it at all. Last week I saved a client £2,800 in tax by adjusting their salary/dividend split that their old accountant had never thought of. If this had been considered in prior years they could have saved tens of thousands!

Just my little bit of advice!

And very valuable too.

I did have an office based accountant for a number of years, and found I had to do most of the work, and ended up with a product no different than my now retired, professionally qualified, extremely experienced accountant (who also has his son working for him). He has an office in his house, not on the high street, and charges me about £500 less than the previous 'firm'.

Maybe these are two extremes. Hope so.

Oh - by the way - I'm a professional, Chartered Engineer, also working from home..... and I'm sure that if you worked from home - your standard of professional care would be the same as it is now.

But your point is very very valid - and it applies to both the big name and home based accountants!

dejongj

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.

How is contributing 17.5% VAT (which they wouldn't get when PAYE in a job) and at least 19% CT, to the Chancellor causing you to claim that the rest of you have to pay extra to subsidise!?

Sure the 17.5% VAT is not coming out of my pocket, it is collected from my clients and passed on...But if I and many others didn't work this way they wouldn't get that bit...So now I can pay less, GB gets more...What is the problem?

RayWolfe

Of course they would!
The company you worked for would have to charge VAT for the service you provided just as a one man business would. A basic understanding of how the wold works would be a great benefit to some people.

welshgasman

>>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.

PMFJI but I am in the same boat as another poster. In my line of work agencies will not touch you unless you are a ltd company or in an umbrella company. It is not solely to get more money, thought that is possible, and legal. We do end up paying employers NI of 12.8% as well.

Now thanks to G Brown, he wants me to pay 11% NI for employee, 12,8% NI for employer, 22% tax and stump up for £30 to 40 a week for accountants. So that is over 45% in taxes. All out of PAYE.

Consequently I am finishing and going on the dole. Just another statistic, but they can pay me for a while. I cannot get any retraining despite being 52 as I am never out of work for 6 months at a time(who wants to be). When I enquired in the Job Centre, a very nice lady who obviously has no clue about the real world (bit like Bliar and cronies) said 'oh here is a course, 1 night per week for 2 years at a university'. How on earth is that classed as retraining.