Shall I propose to my new employer to hire me via my LTD?

Hello!

Does it make sense to suggest my new employer to employ me via my LTD?

How much will I save (%) and what are the pros and cons?

Thanks!
«1

Comments

  • Caz3121
    Caz3121 Posts: 15,542 Forumite
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    is the position inside or outside of IR35?
    will you be working for other customers as well?
    you can use the check here to see whether you would be employed or self-employed
    https://www.gov.uk/employment-status/selfemployed-contractor
  • I am not sure on IR35.


    I won't be working for others for the moment.
  • Congratulations!

    Nothing to stop you proposing it. However, how much you could save (or not) and the pros and cons depend entirely on your new role, your personal situation and your employer.

    If you're seriously considering it you should make an appointment with your accountant first - they will be the best person to guide you in this matter.
  • Pennywise
    Pennywise Posts: 13,468 Forumite
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    Your main savings would be negotiating a higher hourly rate to make up the employers NIC, pension, sick and holiday pay the "employer" won't be paying. Also, you are then able to claim some expenses against the income, which wouldn't be allowable as an employee. Downsides are extra costs of providing your own equipment/training, higher risks as you have no employment rights, higher accountancy fees, etc.
  • tacpot12
    tacpot12 Posts: 7,943 Forumite
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    If your new employer is very large, they will probably not want to employ you via your ltd. company as they don't want the overhead of an extra supplier on their books. They might contract with your ltd. company via an employment agency but you will have to pay the agency a cut of your income, but you can negotiate this below their normal rates as they did not find you the job.
    The comments I post are my personal opinion. While I try to check everything is correct before posting, I can and do make mistakes, so always try to check official information sources before relying on my posts.
  • This isn't something you really have a choice in - your employment status is a matter of fact.

    From what you've posted, I wouldn't even consider a limited company. After all, if you have an employer, you're an employee...
  • csgohan4
    csgohan4 Posts: 10,587 Forumite
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    OP why do you want to go limited company, what is your rationale? if you don't work you don't get paid, can you afford that?


    do you fully understand the tax on dividend's and the levels for tax efficiency.


    I suggest speaking to an accountant or looking at this in more detail.


    If your within IR35 there is no point in a limited company. You have to show control amongst other things as part of the test. As they were your employer and going through the limited company you may be classed as a disguised employee with no control
    "It is prudent when shopping for something important, not to limit yourself to Pound land/Estate Agents"

    G_M/ Bowlhead99 RIP
  • prowla
    prowla Posts: 13,156 Forumite
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    One of the key things is that when you work via a company, that is your employer; the 3rd party who has engaged you to do work, on a contract basis, is your company's client.

    You will not be an employee of the client, you will not receive paid leave, sickness cover, training, paid bank holidays, pension contributions, training, and other employee benefits; basically you get paid for the days worked. You will also not have any right of tenure and be able to be let go without reason (with appropriate notice as per your contract).

    Depending upon the salary, you may find that you need to have a contract daily rate 50% higher to give you the same income.

    However, if you have already started (or signed your contract) as an employee, then it is unlikely that the employer would want to switch you to working on a contract basis.

    If you did switch from employee to contract, then the IR35 "Friday to Monday" rule of disguised employment would kick in.


    If your turnover is above the VAT threshold, then you will need to register for VAT and add that 20% to your invoices to the client.


    You will have to do your own PAYE, VAT, invoicing, have a company bank account (you can't use a personal one), do the requisite monthly/quarterly/annual reports to HMRC and Companies House, and pay the bills to them on time. On a personal level, you will also have to do a self-assessment tax return.


    Engaging an accountant may take the load off the paperwork, but they aren't cheap.


    If the above seems a lot to take in, then it is...
  • The point is that I already have an LTD as I did previous contracts and I also have some research activities that some times require me to have an LTD so that I liaise with universities and other companies and I sign Non Disclosure Agreements etc.


    My accountant is an '...' because I think he only cares for me to pay him the £100 fee per month and he won't give me objective advice.


    If I can save e.g. £10k per year cash by working as LTD, it would be great.


    How do I check if IR35 kicks in? It is a huge company with billions of revenues in the UK, does that automatically make it within IR35?
  • p00hsticks
    p00hsticks Posts: 12,784 Forumite
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    HappyUser wrote: »
    How do I check if IR35 kicks in? It is a huge company with billions of revenues in the UK, does that automatically make it within IR35?

    No, the size of the comapny doesn;t make a difference, although it may mean that the comany has developed a position on how and whether it deals with IR35.

    The application of IR35 is complex, there have been many disputes over it, and there is much written on the subject available on the net but broadly speaking you need to ask yourself

    - Does the company engaging you require you to work in a given location and/or set hours or will you have discretion as to how, when and where you carry out the work ?

    - Do you have to do the work yourself or could you get someone else to do it ?

    As Doctor Strange has already said, the simple fact that you refer to an 'employer' suggests that you look on yourself as an 'employee' which suggests that IR35 would be applicable


    P.S. Look at getting yourslef a better accountant if you're not happy - make them work for their £100 a month
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