if i am an employee paying PAYE is it possible to

The_White_Horse

to set up a company, resign from employment and be a contractor, invoicing the company the equivalent of my salary and then, making a partner the company secretary to deal with all the admin of the company and pay the company secretary a salary? this way we can benefit from two tax free allowances, rather than one.

of course, this is in reaction to the CB debacle.

if that was possible, is it possible to remain in the company pension scheme and get other perks - if they also hired me as an employee but on a low wage ie £10 a month? can you be a contractor and an employee at the same time?

Lokolo

I don't see why this wouldn't be possible, but I can't see any company wanting this.

They would effectively have 2 contracts for 1 person. So you'd have 1 contract saying 38 hours a week paying X to company. Then 1 contract saying you will recieve a salary of Y for no hours.

It would get complicated when they don't renew your contact but then still have 1 contract running as a perm employee.

Working as a contractor is nothing out of the ordinary, but at my company they recieve no benefits (company benefits rather than tax benefits)

The_White_Horse

just trying to find a way of having my cake and eating it!

Linton

Also you would need to be aware of IR35. HMRC will regard you as an employee for tax purposes if they consider that you act and are treated as an employee despite what any contract may say. It could be a little difficult to persuade them otherwise if you really are an employee part of the time and continue to do the same work at other times.

I cant see why an employer would want the hassle. Or if you are sufficiently important to the company to demand this why not simply ask for a pay rise?

notanewuser

What are the figures? Who would the other shareholder be and what would be their input?

PlutoinCapricorn

I believe that it was people in my old profession of IT that thought of this one - in the 1980s maybe. HMRC introduced the IR35 legislation to stop it. It is unfair that someone should get the benefits of having their own business without taking any of the risks and having one client whom they worked for on similar terms as a real employee would.

See here: http://en.wikipedia.org/wiki/IR35

agrinnall

When you say "remain in the company pension scheme" do you mean to continue with the company and yourself (whichever apply) making contributions to a scheme you are curremtly a member of? If so, then no, pension schemes are for employees, and you won't be one. You would be able to set up your own pension scheme, but the only way you would get any contributions from the company would be if you negitiated a rate that would take into account what they currently pay in. You'll also lose all other benefits, such as sick pay, holiday pay, emplyment protection rights, etc.

As previous posters have said, lots of people do work this way, but there has to be a good reason for it and I wouldn't say that trying to squeeze a few quid child benefit is good enough for all the downsides.