Ltd Company Contractors here please, Jonnycoupe ?
- Thread starter Bear
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Is it a flat rate or does it depend on various factors?
Associate
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Do you, (or intend to) claim for working tax credit aswell?
It goes up at the same levels as normal income does (i.e. the next band is £37,400 off the top of my head).
Edit, from my tax tables I have at home:
£1 - £37,400 10%
£37,400 - £150,000 32.5%
Over £150,000 42.5%
Obviously that's total income not purely dividend income.
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Makes no difference in terms of contribution history/benefits whether you earn at the Earning's Threshold or pay shed loads.
If you consider that whatever 'cost' to the company is gross of employer's national insurance, then for every £112.8 you would get £100. Then 20% income tax, then 11% employee's national insurance. So £69. Effective rate = 39%.
For high rate, this drops to £59 (tax up to 40%, NI down to 1%), so an effective 48% on every pound you pay out over that threshold.
Not sure where these figures are from? CT = 21% (minimum) + 0% effective dividend tax rate for basic rate payers = 21%. Considerably less than 39%.
For high rate, it's 21% plus an effective 25% = 46% on every pound you pay out over that threshold. Not much better than salary by the time it gets to this stage.
There's also the added benefit with dividends that you can gift half the shares to your spouse to use up their basic rate band.
The rates are 10%, 32.5% and 42.5% for basic rate, high rate, and additional rate respectively.
There's a 10% tax credit, so the effective rates are actually 0%, 25% and 36.1% respectively.
My friend has just made a similar swap. He was suprised just how much more hes now taking home.
Im also doing £110 a week directors fee which is not only working for your tax free allowance but the slight NI (13p a week) keeps your contributions going. 21% on the rest thats treated as company profits before being released to shareholders. Of course good to drill down those profits with various expenses
My accounts have done a IR35 compliance check on my contract and they were happy after a few tweaks were made. If anything did now arise they would support you in any HMRC investigation rather than avoiding the issue. Main thing that gets HMRC twitchy is silly things like taking more than your should such that its considered a directors loan. Easy done when you have that pot of cash waiting for end of year Corp Tax but definatley something not to do.
I dont have public liability, the client one would work for has a very specific design process which then of course leads on to CAA and FAA certification. Anything happening downstream would be very hard to pin on you unless you were a signatory? No idea to be honest on that front, I certainly dont have insurance and Im currently automotive so the potential for litigation is always there. Anything ive seen you are just treated as part of the machine that was Ford PAG and the suspension orders where anything relating to an issue is disclosed and all documents collated as a company response. Ive never known anyone held personally responsible for anything but thats the design side. What are you looking at in terms of your 'service'?
Thanks for that. In reality, I dont need liability insurance either as the checklists and multi stage review process would take care of that as it gets signed off by the project lead. Unfortunately it is a stipulation of my agency that I have it.
As soon as the insurers hear the words "defence and aircraft", even though it is nothing to do with the flight operation (radar design), they instantly say they arent interested.
Exactly, then factor in flat rate VAT, and it all looks much better.
I pay far more tax/NI than most of the contractors I work with. 
Basically I'm as good as being voluntarily IR35, as effectively we all are covered at the place I work. Everyone else prefers to risk it and totally rips the hell out of. It's fine until you get caught, and remember they can go back 7 years. I personally don't want to risk it, I know two friends/colleagues who were both caught for it in the past and they wouldn't risk it again either.
Google 'Dragonfly Consulting' if you want an idea of what happens if they decide you are IR35.
Basically I'm as good as being voluntarily IR35, as effectively we all are covered at the place I work. Everyone else prefers to risk it and totally rips the hell out of. It's fine until you get caught, and remember they can go back 7 years. I personally don't want to risk it, I know two friends/colleagues who were both caught for it in the past and they wouldn't risk it again either.
Google 'Dragonfly Consulting' if you want an idea of what happens if they decide you are IR35.
Bear - I can arrange public liability/professional indemnity insurance for this sort of thing.
Send an enquiry via our website and I'll look at it this afternoon.
www.newstead.co.uk
Send an enquiry via our website and I'll look at it this afternoon.
www.newstead.co.uk
Sent an equirey via the email form but it flagged up a screen saying it was disabled, so dont know if it went through or not. Will call later, cheers.
I pay far more tax/NI than most of the contractors I work with.
Basically I'm as good as being voluntarily IR35, as effectively we all are covered at the place I work. Everyone else prefers to risk it and totally rips the hell out of. It's fine until you get caught, and remember they can go back 7 years. I personally don't want to risk it, I know two friends/colleagues who were both caught for it in the past and they wouldn't risk it again either.
Google 'Dragonfly Consulting' if you want an idea of what happens if they decide you are IR35.
My intention is to have a very thorough IR35 review and then run everything competely legally.
No email received.
Just email julian at newstead.co.uk with all the information you have. You need to establish whether you need public liability insurance or professional indemnity insurance, or both. Also need to establish what limits of indemnity are required (£1m/£5m etc etc).
I have just managed to eek out the fact that I dont need liability insurance from my Agency. He is obliged to encourage people to have it but not allowed to advise people on any insurance matters for obvious reasons, so wasnt allowed to say it wasnt needed, so I had to go round the houses to get the answer I needed.
Many thanks all the same Julian much appreciated
Soldato
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Not saying anyone in this thread falls in this category, but it would leave a bad taste deciding whether to draw my wages one way or another way depending on how much tax I'd be paying, and whether it would ring alarm bells or not.
That just feels like the wrong thing to do.
That just feels like the wrong thing to do.
I have just managed to eek out the fact that I dont need liability insurance from my Agency. He is obliged to encourage people to have it but not allowed to advise people on any insurance matters for obvious reasons, so wasnt allowed to say it wasnt needed, so I had to go round the houses to get the answer I needed.
Many thanks all the same Julian much appreciated
Cool, problem solved.
Make sure you get it in writing from someone that you have no personal or company liability - this way it's completely water tight.
I've had client's before told it is not compulsory for them to have insurance only for years down the line to still be held liable for damages etc.
Cover your ass!
Thats fair enough its your opinion and you are entitled to it. As a contractor you have to live with the risk that you can be told not to come in any more next week, with no guarantees for work from one week/month to the next.
My feeling is that I should maximise my income and put it away for exactly that reason which means being as tax efficient as possible within the law.