Ltd Company and second job

sdyson31

I work full time and earn 68k. I pay 40% tax (PAYE).

I setup a ltd comany 6 months ago to provide consultancy, this project is going to end this month. I have invoiced 45k before tax and VAT so far through my ltd company. I have not taken any salary out of my company. I have been paying VAT to HMRC and corporate tax is due later this year.

I believe my consultancy work will be inside IR35.

Client may extend my contract but want to pay my taxs after April 06. I will try to negociate my work and contract terms to make it IR35 compliance.

If client decides to extend my contract and wants to pay my taxes then is it worth leaving the company open as there won't be any money coming in? Also, is there any problem of not taking any salary out of my company? HMRC won't have any issue with it?

If i do decide to close the company later this year then do i need to pay 40% tax?

Any advise would be appreciated.

DoctorStrange

If you're inside IR35, no Corp Tax is due as you have to treat the revenue as employment income (so ENIC, IT and NIC is due instead of CT).

As it's technically employment income, you'll have to add it to your other employment income for the relevant tax year i.e. you can't defer until April

From what you've said, you may have significant tax due so it's worthwhile confirming your exact status and, if you are indeed inside IR35 just now, you should consider professional advice to minimise (and calculate) your tax bill.

sdyson31

DoctorStrange said:

As it's technically employment income, you'll have to add it to your other employment income for the relevant tax year i.e. you can't defer until April

    Thank you for the heads up.

    I had a discussion with my accountant in detail and he advised me to leave the company open until Aug this year and then pay all   the corp tax after that.

    I am bit confused about the statement 'can't defer until April' ? If all income is deemed as salary then i still have a time to do my return for 2020 - 2021 period? Ltd company income was earned b/w Oct 2020 and March 31st 2021.

   Please clarify if i am missing something here.

DoctorStrange

There shouldn't be any Corp Tax due if you're inside (no profits = no CT). I'd maybe check that with your accountant.

"Deferring" was poor phrasing on my part, so apologies for that. I meant that you'd be unable to split the income across different tax years if you're inside but you can of course still physically pay it later