Self-Employed with LTd Company and Tax

matt78uk

Hello everyone,

after receiving so many helpful suggestions a few months ago I decided to ask foe some advice again.

I quit my job as a Pharmacist in November 2016 and started working as a locum.
I have opened a Limited Company in April as I had been told I could save more money this way. My partner (we are not married but we have been living together for a long time) is helping me by doing some book-keeping and she has got a 10% share in the company.
I have been suggested to pay myself the minimum wage and to get some dividends every quarter or so.
1) Do you know How much should I pay myself to get the most of it? I don't do the same hours every week, does it make a difference? Can I pay myself the same fixed amount every month? (I have ben suggested just below £917/month, is it correct? )
2) Also, my partner has just started paying Class3 Voluntary Contributions so she will be able to pay toward a pension, how much should I pay her for her job? I have been looking everywhere and unfortunately I am not a very "money-wise" person, I just don't want to mess up with the Class3 contributions.
3) By paying taxes I will be able to get a State Pension someday (probably when I 'll be 80 or so ... :mad: ) where do Class2 Voluntary Contributions come into play in this? Are they worth it? I think you can pay them if you earn more than the Small Profits Threshold of £5,965. (Does it have to do with the £917 I was talking about at point 1? )

Thanks everyone in advance :beer:

Matt

Pennywise

Class 2 are only for the self employed. In tax terms, you're not self employed - you're an employee (officer) of your own limited company. So, forget about class 2 NIC. If you pay wages of the amount someone else has suggested, you'll be getting "credits" towards state pension as an employee as long as you're actually making the monthly RTI payroll returns to HMRC.

[Deleted User]

Op -from your queries I would strongly suggest that you do seek professional assistance - at least for a time. You need to be completely aware of your obligations as a director of a limited company and you seem to be lacking in that area.

If you can grasp the basic concept that you, an individual, and the company are two entirely separate entities (you don't 'pay yourself' the company pays you) you will have cleared a significant hurdle. From that you can progress to understanding the reasons/benefits of choosing to incorporate in the first place.

antrobus

I'd say you need to acquaint yourself with the concept of the Lower Earnings Limit (LEL). For the tax year 2017-18 an employee who is paid £113 or more per week, but less than £154 per week, pays no NI but gets a NI credit, which counts towards the new state pension. As in, if you paid your partner a salary of £5,876 pa, she wouldn't need to pay any voluntary contributions.
https://www.gov.uk/government/publications/rates-and-allowances-national-insurance-contributions/rates-and-allowances-national-insurance-contributions

I would also guess that the £917 a month of which you speak, is simply 1/12th of the personal allowance for 2016/17. The PA is now £11,500, so you'd be talking about £959.

matt78uk

Thank you all for your replies so far.

I don't think I could explain paying her more than £113/week as she only needs a few hours a week to sort out my shifts... if I could pay her for looking after the house as well I would be able to, but I can't see how this would be possible due to the type of business.
Thanks for pointing out the new PA of £11500, I'll bear it in mind. Would you be able to clarify how this actually works? There are 52 weeks in a year, if I need no paid less than £154/week it comes down to a total of £8008.
If you have a look at this link ( w w w . g o v . u k /guidance/rates-and-thresholds-for-employers-2016-to-2017 (sorry I can't post links) ), under "Tax thresholds, rates and codes", it confirms what you say about the PA, which would be £212/week, but scrolling down a page, under "Class 1 National Insurance thresholds" you get different figures.

Would it be safe to say that I should pay myself under £212/week and that my partner will have to pay Class3 NI Voluntary contributions as she doesn't earn £113/week?

Also, do need to sign her up as PAYE un set an insurance in place?

Thanks again for the great replies, I'm starting to understand now.

Matt

matt78uk

The sad thing is that I HAVE an accountant, but he's not very clear and it's a struggle to get in touch with him. 2 Emails sent in the last 6 weeks and still waiting for a reply.
BTW I was trying to contact HMRC as I need to tell them I have setup a Ltd Company but apparently i need a tax reference that you receive by post within 10 days of opening the Ltd Company. I haven't received anything and my accountant (which has set up the company for me and has used his home/office address) hasn't told me anything about it...
:doh:

Matt

uknick

Matt


I've sent you a PM.

xylophone

https://www.gov.uk/government/publications/transforming-the-experience-for-small-business/transforming-the-experience-for-small-business

may be worth a browse.

Get a new accountant?

https://www.unbiased.co.uk/accountant

matt78uk

I certainly will, unfortunately he set up the Ltd Company for me, and he used his office as its address, I think I'll have to stick with him until the end of the year...

Matt

PS I have bookmarked the link, thanks for it

Pennywise

matt78uk wrote: »

I certainly will, unfortunately he set up the Ltd Company for me, and he used his office as its address, I think I'll have to stick with him until the end of the year...

Matt

PS I have bookmarked the link, thanks for it

You can change registered office directly via the Co House website or by posting a simple form. A 5 minute job.

A new accountant will have you changed over from the old accountant and up and running with them pretty quickly - it's bread and butter work - they do it all the time.

You're not happy with your current accountant, so why allow things to get worse - just find a new accountant and change now.

matt78uk

I thought it would be more difficult than than.
Do you think I should change the Company's address and ask them to send me a Unique Tax Reference (UTR) again ? Unfortunately I won't be able to sign up with HMRC without it and I don't want to incur in a fee...
What about the payment for the previous accountnant?
Apart from opening the Ltd Company for me (for which I have already paid him), and giving me some advice the two times I met him he hasn't done any "accountancy" yet for me.
Should I just send him an email to ask him to send me an invoice?

ALso if you don't mind me asking, when I first asked him about setting up a limited company it was because I thought I needed it so I could pay my partner a small wage to pay towards a pension. However she is now paying Class3 contributions which means I won't need to pay her a wage, I wonder if it would have made more sense to work as a sole-trader...

Many Thanks Pennywise, you are a star! :T

Matt