ARmy Rumour SErvice

**FatBoyGeorge** · 17-07-2012, 22:35

Evening guys,

I have searched and found a couple of threads on Ltd companies but they don't really answer my questions, so here I am.

I may soon find myself working as a contractor on a regular rotation with a good daily rate of pay, a situation which is completely new to me. I have heard second hand stories from friends of friends about contractors setting up Ltd companies for the use of tax avoidance, I just want clarification on what is common practice and legal.

Questions I have at the moment are: -

How do I actually set up a Ltd company?
How does paying yourself a low wage with large bonuses/dividends work?
What range of purchases can you claim VAT back on?
What paperwork will be involved for myself?
I've heard about (including on here) about purchasing cars/houses etc. through the Ltd company, what are the benefits/pitfalls of this?

That is it for now, I'm sure they'll be more.

Thanks in advance.

FBG

**Rod924** · 17-07-2012, 22:50

Firstly, what service are you offering and to whom? IR35 compliance maybe something you need to be aware of.

Setting up a ltd company is a peice of piss. £18 and you can do it on line.

You pay yourself (paye ) £144 per were. This avoids paying employer contribution (you are an employee of the ltd company) plus NI contributions/Tax

You pay 20% corporation tax on net profit but can take a dividend of the net profit x 10/9th.

you can take a proportion of your heating/lighting costs if working from home but not a proportion of the mortgage interest.

Are you aware of the 'be the boss' scheme?

**DB216LOKDVR** · 17-07-2012, 22:56

Contact your local Tax Office, they have training days to discuss setting up as self employed and forming LTD Companies.

The training days are free, they tell you every thing you need to know and have various paper work exercises to complete with examples etc. Given copies of all the forms, VAT explained etc.

They explain the 'misunderstandings' and what you can and cannot do.

They also throw in free tea, coffee and biccies. (Be early to grab the decent ones).

Lots of question and answers and example cases discused.

**CaptainPlume** · 17-07-2012, 23:07

I'davoid it like the plague unless you are very confident about what you're doing. The IR35 thing put paid to a lot of the loopholes.

I'd look at setting up with an Umbrella Company (I use Atlantic Umbrella who have been great) as they will process all your PAYE & NI and do all the tax offsets for you.

**FatBoyGeorge** · 17-07-2012, 23:10

Originally Posted by Rod924

Firstly, what service are you offering and to whom? IR35 compliance maybe something you need to be aware of.

Working in the Oil & Gas industry as a safety trainer. I would be paid through an intermediary, so would have to pay comparable tax and NIC's???? Is that right?

**FatBoyGeorge** · 17-07-2012, 23:12

Originally Posted by CaptainPlume

I'd look at setting up with an Umbrella Company (I use Atlantic Umbrella who have been great) as they will process all your PAYE & NI and do all the tax offsets for you.

Do you find you make notable savings through an umbrella company?

**CaptainPlume** · 17-07-2012, 23:17

Originally Posted by FatBoyGeorge

Do you find you make notable savings through an umbrella company?

I'm not sure that since the IR35 regs came in there are any significant savings to be made any more, but I'm not an expert. For me what is saved is my time - I send a timesheet to the Umbrella Company, they invoice the client & sort out the tax & NI with no need for me to wrestle with it all or employ an accountant to do so for me.

**Bushmills** · 17-07-2012, 23:19

Originally Posted by FatBoyGeorge

Do you find you make notable savings through an umbrella company?

Go and see a good chartered accountant.

The first consultation will probably be free.

**Rod924** · 17-07-2012, 23:20

IR35 is about ensuring you're not really an employee. Basically, if you are going to work on a three year project for company x, and you are not supplying/trading with no other companies, effectively you are an employee. I got my contractors to complete a Contract for Service for specific parts of the project..that protected both parties.

Not sure if HMIT offer training days now due to cut backs.

Umbrella companies do their job, but you are paying for that plus you will still need an accountant for your returns and self assessment