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  • FIRST POST
    • lukey105
    • By lukey105 16th Apr 18, 9:54 PM
    • 34Posts
    • 3Thanks
    lukey105
    Ltd co newbie - help !!
    • #1
    • 16th Apr 18, 9:54 PM
    Ltd co newbie - help !! 16th Apr 18 at 9:54 PM
    Hi all

    Thanks in advance !!

    Taking a new job in June - covering maternity leave (but could well lead to permanent)

    New employer suggested that I do this as a 6 month contract with them - set myself up as a ltd company and get a tax break

    I can't seem to get to the bottom of exactly how this would work out better for me (40k salary) !!??

    Any help appreciated
Page 1
    • 00ec25
    • By 00ec25 16th Apr 18, 11:04 PM
    • 6,989 Posts
    • 6,659 Thanks
    00ec25
    • #2
    • 16th Apr 18, 11:04 PM
    • #2
    • 16th Apr 18, 11:04 PM
    don't bother

    your new "employer" is trying to save a bit of tax themselves by making out that you will be an arm's length "contractor" so they won't have to pay the usual costs of employment such as employers national insurance and pension

    in the meantime you will be lumbered with the costs of establishing a company for all of 6 months and will remain exposed to HMRC challenging you for being an employee of the person you intend to work for at the end of 6 months, in other words they will see it as a sham.

    has your new employer suggested how it would answer the following questionnaire as that is what HMRC will throw at you to decide if "you" (your company) are inside or outside IR35:

    https://www.gov.uk/guidance/check-employment-status-for-tax
    • prowla
    • By prowla 17th Apr 18, 7:18 AM
    • 10,076 Posts
    • 8,294 Thanks
    prowla
    • #3
    • 17th Apr 18, 7:18 AM
    • #3
    • 17th Apr 18, 7:18 AM
    The first thing is that if you operate a limited company then whoever you do work for are customers or "clients", not employers.

    The client will not be required to pay you holiday pay, pension, tax, National Insurance, sick pay; you have to do all of that.

    You will have to invoice them for completed work and ikely they will have 30-day payment in arrears.

    You may have to take out liability insurance and also use the services of an accountant, and also (maybe) register for VAT.

    For 20k (ie. 40k salary for 6 months), it may be debatable as to how much you get out of it.

    The other thing is that the customer has no allegiance to you, so they can terminate early with no questions asked (it's just happened to me - a customer has run out of funding and so terminated a 6-month contract inside two months).

    All-in-all, I'd say that there is little to gain from taking this role on a contract basis.
    • csgohan4
    • By csgohan4 17th Apr 18, 7:53 AM
    • 4,897 Posts
    • 3,127 Thanks
    csgohan4
    • #4
    • 17th Apr 18, 7:53 AM
    • #4
    • 17th Apr 18, 7:53 AM
    Limited company is not as tax efficient as it used to be, especially with the limited of the dividends tax free amount to 2k. for 6 months only, I wouldn't bother either.
    "It is prudent when shopping for something important, not to limit yourself to Pound land/Estate Agents"
    • TheCyclingProgrammer
    • By TheCyclingProgrammer 17th Apr 18, 12:10 PM
    • 3,229 Posts
    • 1,896 Thanks
    TheCyclingProgrammer
    • #5
    • 17th Apr 18, 12:10 PM
    • #5
    • 17th Apr 18, 12:10 PM
    I!!!8217;d echo the advice of the above. Make them take you on as an employee or if they won!!!8217;t, use an umbrella company.
    • lukey105
    • By lukey105 23rd Apr 18, 4:51 PM
    • 34 Posts
    • 3 Thanks
    lukey105
    • #6
    • 23rd Apr 18, 4:51 PM
    • #6
    • 23rd Apr 18, 4:51 PM
    Amazing !!! Pretty clear what to do !!
    Thanks all
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