Work as contractor - under umbrella company or limited company

JohnBravo

Hi Gents,
I understand the administration burden while running a limited company, but why not to try it?
As far as I know running limited companies in UK is the easiest in the whole Europe not mentioning that it takes only 24h to online set it up.
Again thank you for your input.

Georgesmum79

If you set yourself up as a Ltd company, you will be paid without tax and NI deductions. You can then draw a salary up to some £10K per year (about £600 pm) without paying tax, and then the rest you could draw as dividend. That way you would pay very little tax- and that's what I would do.

I am not aware of Government Departments (where I work) deducting tax and NI from contractors come next April. We are tightening the assurance on our contractors' tax affairs as the IR35 legislation means that the employer COULD be considered liable for those if the working practices are such that they in effect make the contractor and employee under tax law. My organisation relies heavily on contractors and if we said we will deduct their tax and NI from next April, we would have a mass walk-out.

I would definitely recommend the Ltd company approach. Hope that helps.

paddyrg

Georgesmum79 wrote: »

If you set yourself up as a Ltd company, you will be paid without tax and NI deductions. You can then draw a salary up to some £10K per year (about £600 pm) without paying tax, and then the rest you could draw as dividend. That way you would pay very little tax- and that's what I would do.

I am not aware of Government Departments (where I work) deducting tax and NI from contractors come next April. We are tightening the assurance on our contractors' tax affairs as the IR35 legislation means that the employer COULD be considered liable for those if the working practices are such that they in effect make the contractor and employee under tax law. My organisation relies heavily on contractors and if we said we will deduct their tax and NI from next April, we would have a mass walk-out.

I would definitely recommend the Ltd company approach. Hope that helps.

Don't forget the dividends tax is on top of corporation tax, rather you can only disperse profits, and they'll have had CT paid on them, so the tax saving isn't nearly as impressive as it sounds!

Georgesmum79

But you can draw a dividend tax free up to something like £20K (can't remember the figure). So unless you're going to draw a lot of money out, you could draw £10K tax free as income and another £20K as dividend. You just pay some corporation tax- obviously using an accountant would be very helpful! ��