Contract work and Limited company

happyandcontented · 22 October 2017 at 2:00PM

I am just telling you what happened and I assure you I am not confused.

I am aware of the differences you mention re agencies and accountants and the company concerned only work via one agency, and they then specify from an approved list both umbrella companies and accountancy firms for their contractors.

motorguy · 22 October 2017 at 2:16PM

happyandcontented wrote: »

I am just telling you what happened and I assure you I am not confused.

I am aware of the differences you mention re agencies and accountants and the company concerned only work via one agency, and they then specify from an approved list both umbrella companies and accountancy firms for their contractors.

So you're saying that a company can tell you who to use an accountant? :rotfl:

They may well specify the agency, sometimes the umbrella if you're using one - but even at that why would they care? They are engaging with the agency - but definitely not who does your books at year end.

Nope. I've worked with many "big name" companies - IBM, Computacenter, Capita, some of the biggest councils etc and never have they asked or cared who my accountants were. Thats frankly laughable. So you're saying this "big name" company expects your husband to change accountancy firms for the duration of his contract? Which might be say, 3 months???? :rotfl:

Sure technically you only engage with your accountant at year end and by that point you'd be long gone from the "big name" company.

Not a pups chance would i ever let a company specify who my accountant should be. !!!! that for a game of soldiers.

Nah - sorry, but you've got the wrong end of the stick somewhere OR your husband works in some very niche role for a very niche organisation but its by no means "the norm" or anywhere near it that a company can tell you what accountancy firm to use.

happyandcontented · 22 October 2017 at 2:31PM

motorguy wrote: »

So you're saying that a company can tell you who to use an accountant? :rotfl:

They may well specify the agency, sometimes the umbrella if you're using one - but even at that why would they care? They are engaging with the agency - but definitely not who does your books at year end.

Nope. I've worked with many "big name" companies - IBM, Computacenter, Capita, some of the biggest councils etc and never have they asked or cared who my accountants were. Thats frankly laughable. So you're saying this "big name" company expects your husband to change accountancy firms for the duration of his contract? Which might be say, 3 months???? :rotfl:

Sure technically you only engage with your accountant at year end and by that point you'd be long gone from the "big name" company.

Not a pups chance would i ever let a company specify who my accountant should be. !!!! that for a game of soldiers.

Nah - sorry, but you've got the wrong end of the stick somewhere - the only remote possibility i can think of is your husband works in an incredibly niche role for a high risk / high security firm which isnt the case here anyway.

Yes, that could be it. The contract will be 2 plus years.

motorguy · 22 October 2017 at 3:54PM

happyandcontented wrote: »

Yes, that could be it. The contract will be 2 plus years.

Genuinely can think of absolutely no reason why the client would give a monkeys as to who the end contractor use as an accountancy firm.

Employer engages with Agency engages with Limited Company have the Contractor as an employee, Limited Company employ the services of an accountant to submit HMRC returns. In fact you dont even need to do that, you could do them yourself.

Why would the client care?

I could understand if the agency suggested Umbrella companies or accountancy firms, but i cant see why the client would insist?

I can understand it actually that you'd have to have a Ltd Co or Umbrella Co in place before the agency can engage with you but they've no right to insist or make it a pre-requisite that you use any particular accountant.

Even IF they have made your husband do that then its certainly not the norm

mgp1000 · 13 November 2017 at 7:08PM

tacpot12 wrote: »

Hi, I've contracted in this way on two previous occasions. You wouldn't be a partner in her company, you would be a shareholder.

Setting up a limited company for this purpose is very easy, and costs very little; £10 with quickformations.co.uk, who I've used in the past.

Your wife needs to read up on IR35, and decide whether the contract being offered will be caught by the IR35 rules, to make sure she knows how much she needs to pay herself. (What isn't paid out of the company as expenses is paid out as dividends to the shareholders.)

If the contract is caught by IR35, she will need to pay out her income mostly as PAYE and NI, which will mean that there will be minimal dividends to pay to you and very limited savings in tax.

If the contact is outside the IR35 rules, she can pay herself a minimal salary, just enough to pay enough NI to count towards the State Pension, and take the rest as dividends, split with yourself to save tax.

If in the future she wants to stop contracting and take a permanent job, she just winds the company up. You then cease to be a shareholder. You might also consider becoming a director or company secretary depending on whether you want to take responsibility for the operation of the company. I would avoid becoming a director or company secretary if you can.

From your point of view, the biggest impact is that you will have to complete a Self-Assessment for Income Tax (unless the dividends you receive are below the personal dividend allowance).

Thank you for your reply.

At the risk of sounding dense, can I ask what advantage it would offer me to be a shareholder or a director of her company? I work for the NHS full time on a permanent contract.

tripled · 13 November 2017 at 9:27PM

mgp1000 wrote: »

Thank you for your reply.

At the risk of sounding dense, can I ask what advantage it would offer me to be a shareholder or a director of her company? I work for the NHS full time on a permanent contract.

You get a tax free dividend allowance of 5k per year (possibly dropping to 2k from next April), so between you, you can take out 10k tax free. Plus you can distribute the income between you to get as much out at a lower tax rate as possible.

Pennywise · 14 November 2017 at 9:23AM

tripled wrote: »

You get a tax free dividend allowance of 5k per year (possibly dropping to 2k from next April), so between you, you can take out 10k tax free. Plus you can distribute the income between you to get as much out at a lower tax rate as possible.

But if you're already a higher rate taxpayer, or your income is already close to the H?R threshold, then these opportunities are far smaller and less useful.

Firegirl · 16 November 2017 at 2:51AM

I’m a contract Test Analyst. If you think the project is gonna last a long time set up limited. My accountant did it all for me and the only hassle was setting up a bank account and insurances. Prior to going Limited I used Parasol umberella company and it was Really easy to set up. For umberella, you are employed by the umberella company and they pay you into a personal account.

If she’s going through an agency to get the job they will usually help you with knowing what you need to do if you decide to go Limited.

Contract work and Limited company

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