Consultancy roles

naf123

If one set up a company and set up as a Director , billing companies for consultancy invoices, does the director have to register as self employed / fill out a tax assessment form if there is no intention to withdraw money from the company?

Sandtree

Whats the harm of doing a self assessment? Takes 10 minutes if your affairs are simple as no drawings. 

Your real issue will not be SA but IR35 when it comes in in April

naf123

Sandtree said:

Whats the harm of doing a self assessment? Takes 10 minutes if your affairs are simple as no drawings. 

Your real issue will not be SA but IR35 when it comes in in April

Am I correct assuming IR35 is only applicable if I work for a relatively large company ?

Why do a self assessment If you don't have to ?

p00hsticks

naf123 said:

If one set up a company and set up as a Director , billing companies for consultancy invoices, does the director have to register as self employed / fill out a tax assessment form if there is no intention to withdraw money from the company?

Company directors aren't self employed.

You have to fill in a self assessment form if HMRC tell you to.

unforeseen

IR35 applies to medium and large businesses.
Small companies are exempt. A company is small if it has the following features

• a turnover of £10.2m or less; 
• a balance sheet total of £5.1m or less; and/or 
• 50 employees or less.

Dox

unforeseen said:

IR35 applies to medium and large businesses.
Small companies are exempt. A company is small if it has the following features

• a turnover of £10.2m or less; 
• a balance sheet total of £5.1m or less; and/or 
• 50 employees or less.

Don't forget those classifications apply to the end client, not the size of the business providing the service.

naf123 said:

If one set up a company and set up as a Director , billing companies for consultancy invoices, does the director have to register as self employed / fill out a tax assessment form if there is no intention to withdraw money from the company?

Your question doesn't make sense. Why bother to set up a company if you don't intend to take money out of it? How will you access your earnings?

naf123

Dox said:

unforeseen said:

IR35 applies to medium and large businesses.
Small companies are exempt. A company is small if it has the following features

• a turnover of £10.2m or less; 
• a balance sheet total of £5.1m or less; and/or 
• 50 employees or less.

Don't forget those classifications apply to the end client, not the size of the business providing the service.

naf123 said:

If one set up a company and set up as a Director , billing companies for consultancy invoices, does the director have to register as self employed / fill out a tax assessment form if there is no intention to withdraw money from the company?

Your question doesn't make sense. Why bother to set up a company if you don't intend to take money out of it? How will you access your earnings?

Sorry a bit of context needed . I already have a full time job this is for a consultancy role where I rather save the money for a rainy day eg when I lose my job and then access this money whilst I'm in a lower tax band  .

Dox

naf123 said:

Dox said:

unforeseen said:

IR35 applies to medium and large businesses.
Small companies are exempt. A company is small if it has the following features

• a turnover of £10.2m or less; 
• a balance sheet total of £5.1m or less; and/or 
• 50 employees or less.

Don't forget those classifications apply to the end client, not the size of the business providing the service.

naf123 said:

If one set up a company and set up as a Director , billing companies for consultancy invoices, does the director have to register as self employed / fill out a tax assessment form if there is no intention to withdraw money from the company?

Your question doesn't make sense. Why bother to set up a company if you don't intend to take money out of it? How will you access your earnings?

Sorry a bit of context needed . I already have a full time job this is for a consultancy role where I rather save the money for a rainy day eg when I lose my job and then access this money whilst I'm in a lower tax band  .

Thanks. Simply being a director of a limited company doesn't automatically mean you have to submit a self assessment tax return; depends on how much income you have from other sources. Easy to check here: https://www.gov.uk/check-if-you-need-tax-return

Leaving the money sitting in a company account might not be the best use of it. If you need to top up your pension provision, your company (provided you are an employee of it, albeit an 'unpaid' one!) can normally make a 'reasonable' contribution on your behalf and get corporation tax relief on that contribution, subject to the usual overall annual limit from all sources of £40K including any tax relief on personal contributions.  

naf123

Thanks. I suppose I have to weigh up the value of paying an accountant to maintain statutory accounts etc..... Which apparently can be expensive

Sandtree

naf123 said:
Am I correct assuming IR35 is only applicable if I work for a relatively large company ?

Why do a self assessment If you don't have to ?

No, if the business you are providing services to is medium sized it also applies.

Whilst I now have no choice but to do SA I did always find that even as an employee with a tiny bit of self employment that the SA generated a tax refund... obviously now as a 100% consultant who does draw from their company I have to do SA and it results in taxes to be paid

naf123 said:

Thanks. I suppose I have to weigh up the value of paying an accountant to maintain statory accounts etc..... Which apparently can be expensive

You can do it yourself if you want but if you think the 10 minutes to do a SA is too much hassle you really dont want to be looking at all the returns for a Ltd.

Dox

naf123 said:

Thanks. I suppose I have to weigh up the value of paying an accountant to maintain statutory accounts etc..... Which apparently can be expensive

Needn't be - you can file online yourself using a simple template from Companies House. The only unavoidable cost is £13 a year to file your confirmation statement - takes about 30 seconds.

HMRC provides free basic payroll software which is simple to use, and there's plenty of help on gov.uk to guide you through the basics (although a spot of professional advice at the outset, to make sure you are doing things correctly, is always a good idea).

Don't forget you have a 'dividend allowance' (currently £2,000 a year) on which you don't pay tax regardless of your other income, so if you don't have dividends from elsewhere, paying yourself a dividend from your own company is highly tax effective.

Not sure why you're so averse to completing a self assessment form. Once you've done the first one you only need to repeat the process each year, updating the figures and adding anything new in terms of income etc.