Tell me about it. Late one night I forgot to click RTI submission after doing payroll (had been a nightmare) and submitted them next morning. 5 months later received an automatic £100 fine for late submission
Advice request: Starting limited company
- Thread starter Dirk Diggler
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Tell me about it. Late one night I forgot to click RTI submission after doing payroll (had been a nightmare) and submitted them next morning. 5 months later received an automatic £100 fine for late submission
Paying your fair share of tax = paying what you are required to by law. It's the government's responsibility to set what those taxes are, not the citizen's job to decide what is fair.
Besides that, working as a freelancer through your own limited company versus being a full-time employee is a whole series of trade-offs, it's not for a lot of people.
Associate
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This method of remunerating yourself will work for some and not for others. It's simply not possible in my industry to structure your affairs in this way. Likewise as others have said, there can be an immediate tax advantage, but that advantage doesn't recognise the other benefits that might accrue as the result of employment.
I would pay a whole lot less tax if was able to go this route, but hen I would not be provided with: private medical, private dental, health cash plan, family life insurance, diability/illness cover, ipad, iphone, double-matching of pension contributions (i.e. I pay in 10% of my base taxable salary (thereby not poaying any tax on that portion anyway) and they top-up with a further 20%, as well as various other perks.
Its all relative and depending on the industry and your personal situation, there may be no real advantage at all to looking at using a limited company structure.
An accountant is the person to go see and get some advice. Even if it costs you a couple of hundred pounds for some proper professional advice, it is worth knowing with accuracy whether it will be worth your while etc.
I would pay a whole lot less tax if was able to go this route, but hen I would not be provided with: private medical, private dental, health cash plan, family life insurance, diability/illness cover, ipad, iphone, double-matching of pension contributions (i.e. I pay in 10% of my base taxable salary (thereby not poaying any tax on that portion anyway) and they top-up with a further 20%, as well as various other perks.
Its all relative and depending on the industry and your personal situation, there may be no real advantage at all to looking at using a limited company structure.
An accountant is the person to go see and get some advice. Even if it costs you a couple of hundred pounds for some proper professional advice, it is worth knowing with accuracy whether it will be worth your while etc.
Nobody ever thinks they should pay more tax than they do. And as Mid Gen says, there are risks been a freelancer through your own company and isnt for everybody. There are some months you might not get paid whereas on a salary you are guaranteed that payment each month.
True but as a contractor through a limited company, the amount you get paid should be up to 40% more than than en employee.
This 40% then covers your private medical, dental, pensions, sick insurance, etc
I suspect if you factor this into your circumstances along with the tax saving then you would be substantially better off.
Soldato
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Tell me about it. Late one night I forgot to click RTI submission after doing payroll (had been a nightmare) and submitted them next morning. 5 months later received an automatic £100 fine for late submission
If you hadn't submitted the next morning that could have been £600
What utter tosh. Our tax laws are massively complicated and there will always be clever people that figure a way of ripping off the system. It is very difficult to only capture the scummers dodging tax through personal employment companies vs genuine small businesses. IR35 is too difficult to enforce properly. Trying to justify unethical behavior by claiming the government haven't managed to prevent it is hilarious.
Apart from the job security there really aren't any trade offs. If I were to take up a job contracting on £700 a day paying tax at an effective rate of 17% I would be vastly better off than I am at the moment.
Soldato
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Accounting costs are tax deductible for a start, but most of what you are soeaking about is gubbins in relation to taxation. It is more related to why an hourly rate or a daily rate has to be higher for a contractor, than it should be for a paye member of staff.
There is nothing to suggest this chnage in rate some come from lack of tax paid, it should come from what the persons limited comoany are charging for their sevices in the first place.
The rate changes on dividends is a good way to shore things up somewhat, good on Osbourne, saves chasing the 600000 one man companies, when you can chnage their effective rate to bring them more into line.
But that's the point though - you'd get £700 a day because they can effectively fire you at any point with minimal notice and no pay off, and you wouldn't know when your next job would be. The high day rates are the trade off for companies having the ability to have a very flexible workforce and for the induvidual having little job security.
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- Rollergirl
Out politicians and fat cats absolutely depend on people like you.
Yes - people with integrity.
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Yep, you pay more so they don't have to.
You might be losing £1000's but at least you can see yourself as a pillar of the community and an all round good guy.
Soldato
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I've just set up my own Ltd, was very easy. Currently speaking with a few accountancy firms to see which suits my needs best. Will be setting up the business bank account soon as well. The reality of the situation only really set in when I received the letter confirming the creation of the company and I was referred to as "Director" 
And you probably still pay less tax overall, I'm sure your integrity makes you warm and fuzzy inside but it doesn't pay for public services.
Why don't you do it then and pay the full PAYE tax, that way you would be better off and you could then pay more tax to help fund the country. Put your money where your mouth is, its a win win.
lol. But you do have a point. For anybody who could go down the ltd company route and reduce their tax but dont for moral reasons could just do that and poay the normal 40% tax as though they were an employee on there new contracting rate. I am sure the Government would be thankful.
All you have to do is pay yourself the full amount through PAYE.
Hahaha apart from the slight issue that I would have to quit my current job and then find a job working for a different company (my company won't hire someone on a limited company basis who has worked as an employee in the last 6 months).
On a side note, on of the guys has been contracting here for 6 years.......I have no idea how thats acceptable.
On a side note, on of the guys has been contracting here for 6 years.......I have no idea how thats acceptable.
I reckon if he doesn't do it then he is being very selfish, why wouldn't he want to get paid more and contribute more to the country, show some integrity and contribute more!
If you think you would only pay 17% on 700 pound a day, you really don't have the slightest clue what you're talking about. The tax savings really aren't that big over being an employee, especially when you factor in costs like accountants, liability insurance yada yada. The real advantages are when it comes to things like pensions.
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