I do Andrew. You see I learn by doing…
then paying a professional to put it right.
nsmith1180:
I do Andrew. You see I learn by doing…then paying a professional to put it right.
That’s the route I took, ltd with an accountant let them do the work or so I thought, was paying for something I was either not using or could do myself so I binned them off, got another for my end of year tax assessment, corporation tax and vat. Binned the whole thing off as a bad idea.
AndrewG:
bigtwister:
nsmith1180:
27k PAYE works out at £103.83 a day, on which you will pay tax and NI and Pension. At that PAYE rate and £120 a day Ltd.Co. the driver is £2.68 a day better off gross than the PAYE bloke or £696.80 a year assuming no extra days are worked overtime.A PAYE driver will take home £21,423.68 if auto-enrolled at 1% into a pension.
The Ltd Co driver can pay himself £16,099.68 without paying a penny in Income Tax, (Will pay £400.32 in NI though) 260 days x 120 a day = £31,200 a year so £15,100 left to get out, guesstimating here 35% total deductions, (depends on your tax code etc,) means say another £10k into the drivers sky-rocket. Ltd Co takes home £26,099.68 and is £4,676 a year better off.
Or you can fight smart and have the company pay your mobile bill, as its a business asset. £600 a year out of the company with no tax. Give the company an office in your house, charge it rent at £300 a month. Thats another £3600 a year out of the company. Need a new laptop? Business asset, business buys it. There are some who go too far in my opinion and count date night with the Mrs as Corporate Entertainment and claim that back. To me thats out and out tax fraud but some can justify it.
Andrew, yes, VAT on £27k. We have the flat rate scheme which used to mean that you could charge VAT on sales and keep a portion. Until April 2017 it was 10% so on a £100 invoice you would charge £20 VAT but only pay £10 to the VAT man. This year it changed so that if you are a low costs business, eg spending less than 2% of turnover on stock, which an Ltd Co. driver would be, you pay 16.5% to the VAT man so £16.50 to him and only £3.50 extra to you. It doesn’t make sense to be VAT registered anymore unless you own vehicles.
Thanks for the in depth reply Nick
^^^^^
This man does NOT need an accountant…
Actually he does scrap the ni costs as he won’t pay any NI for starters but will get it credited. As for pension he won’t be required to enroll. So he does need am accountant
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alix776:
Actually he does scrap the ni costs as he won’t pay any NI for starters but will get it credited. As for pension he won’t be required to enroll. So he does need am accountantSent from my SM-G950F using Tapatalk
NI, all employees, and the director of a limited company is counted as an employee of that company, are required to pay National Insurance contributions on all earnings over £8060 a year so £400 of NI is inevitable if you pay yourself £11,500 /12. Thats your tax personal allowance if you are on a normal tax code by the way.
Pensions. Only mentioned in relation to the PAYE driver, not the Ltd.Co. one.
And as I said, I do need an accountant to keep all the decimal places straight. Which is why I pay one, if I could do it all myself I wouldn’t be wasting time driving lorries.
nsmith1180:
alix776:
Actually he does scrap the ni costs as he won’t pay any NI for starters but will get it credited. As for pension he won’t be required to enroll. So he does need am accountantSent from my SM-G950F using Tapatalk
NI, all employees, and the director of a limited company is counted as an employee of that company, are required to pay National Insurance contributions on all earnings over £8060 a year so £400 of NI is inevitable if you pay yourself £11,500 /12. Thats your tax personal allowance if you are on a normal tax code by the way.
Pensions. Only mentioned in relation to the PAYE driver, not the Ltd.Co. one.
And as I said, I do need an accountant to keep all the decimal places straight. Which is why I pay one, if I could do it all myself I wouldn’t be wasting time driving lorries.
Yeah I know nothing I’ve only been doing it for 8 years
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I wasn’t saying you know nothing but you incorrectly said that I was wrong about somethings so I explained how I had come to those understandings.
Though if you have been doing it for 8 years, paying yourself a decent wage and not paying any NI I would get an accountant to check out your records. You could be in line for a nasty shock if HMRC ever realise what you’ve been doing.
bigtwister:
Day work Mon-Fri PAYE is £27k…Quoted £120 day rate as ltd
I’m on £125 a day, salaried, 4on-4off. And I’m happy. And I spend half the week at home. And I’m in a pension scheme. And I’m in a sick scheme. And if I have a fatal accident at work, my beloved gets enough to put me under, and celebrate. And I get a fortnight holiday for taking 4 days off.
I’m very hard trying to think of a reason why I would want to go “self employed”…
Ohh, I almost forgot. If anything at work goes tots up, I still get paid…
I’m glad you are happy with your situation but its all set up in the operators favor.
In one year there are as we know 365 days, or on a traditional Monday to Friday job, 52.14 working periods of which you as a driver get 5.6 weeks holiday.
4 on 4 off the vehicle can be worked for 91.25 periods. Now 4 on 4 off is technically a job share, which means that legally you are only entitled to a pro-rata holiday allowance. 4 on 4 off gives each driver 45.62 workable periods in a year or 87% of a full timer’s working time so the employer can get away with giving you 4.87 weeks holiday a year.
Of course because you are working fewer days, the average over the reference period is lower. Based on 27k a year, which the smart operator will express as a day rate rather than an annual salary, your holiday pay for a week off is £64.75 lower than the five day week bloke next to you.
A normal 5 day week for a tramping wagon means that an operator gets 10 earning days a fortnight with 8 paid nights out. Four on Four off gets you 14 earning days a fortnight with either 11 or 12 paid nights out. So every other cycle he saves a night out payment.
The operator is paying £44,438.75 to staff his 4 on 4 off compared to £31,980 to staff his 5 dayer, both figures including nights out.
A 5 day week wagon will work 260 days in a year and in that time, assuming £500 a day will bring in £130,000.
A 4 on 4 off wagon can work 364 days in the same year and with the same assumptions will bring in £182,000.
A £52,000 increase in turnover for a £12,458.75 increase in cost. Or to put it a different way, a 28% increase in turnover for a 16% increase in standing costs.
Ltd is always better as you are getting the whole gross pay into your account. Whatever gross you are getting as paye (check your payslip) you will see it in your bank account. You will need to pay tax on that but not like 150 pounds a week as it is the case with paye. Much less than that. And at the end of the year. Up until then it’s your extra money to spend.
nsmith1180:
I’m glad you are happy with your situation but its all set up in the operators favor.In one year there are as we know 365 days, or on a traditional Monday to Friday job, 52.14 working periods of which you as a driver get 5.6 weeks holiday.
4 on 4 off the vehicle can be worked for 91.25 periods. Now 4 on 4 off is technically a job share, which means that legally you are only entitled to a pro-rata holiday allowance. 4 on 4 off gives each driver 45.62 workable periods in a year or 87% of a full timer’s working time so the employer can get away with giving you 4.87 weeks holiday a year.
Of course because you are working fewer days, the average over the reference period is lower. Based on 27k a year, which the smart operator will express as a day rate rather than an annual salary, your holiday pay for a week off is £64.75 lower than the five day week bloke next to you.
A normal 5 day week for a tramping wagon means that an operator gets 10 earning days a fortnight with 8 paid nights out. Four on Four off gets you 14 earning days a fortnight with either 11 or 12 paid nights out. So every other cycle he saves a night out payment.
The operator is paying £44,438.75 to staff his 4 on 4 off compared to £31,980 to staff his 5 dayer, both figures including nights out.
A 5 day week wagon will work 260 days in a year and in that time, assuming £500 a day will bring in £130,000.
A 4 on 4 off wagon can work 364 days in the same year and with the same assumptions will bring in £182,000.
A £52,000 increase in turnover for a £12,458.75 increase in cost. Or to put it a different way, a 28% increase in turnover for a 16% increase in standing costs.
^^^^^^^^^^^^^^^^^^^^^
The maker of a good business model canvas…
nsmith1180:
I wasn’t saying you know nothing but you incorrectly said that I was wrong about somethings so I explained how I had come to those understandings.Though if you have been doing it for 8 years, paying yourself a decent wage and not paying any NI I would get an accountant to check out your records. You could be in line for a nasty shock if HMRC ever realise what you’ve been doing.
Accountant does do my books thanks
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polamaniec:
Ltd is always better as you are getting the whole gross pay into your account. Whatever gross you are getting as paye (check your payslip) you will see it in your bank account. You will need to pay tax on that but not like 150 pounds a week as it is the case with paye. Much less than that. And at the end of the year. Up until then it’s your extra money to spend.
It’s not your money, it’s the company’s money from which you pay legitimate costs and subsequent Corporation Tax from the profits. Your earnings still attract Income Tax and NI and your dividends are subject to 10% tax.
nsmith1180:
Though if you have been doing it for 8 years, paying yourself a decent wage and not paying any NI I would get an accountant to check out your records. You could be in line for a nasty shock if HMRC ever realise what you’ve been doing.
I did my accounts for the first eight years then when I changed tack brought an accountant in. After three years I had a visit from both HMRC and VAT to check my books. There were minor discrepancies but nothing untoward considering I’m self taught. One piece of advice they did give was always to make sure I paid some tax and NI on my earnings. That keeps us happy and leaves you alone. I’ve never had a problem since.
nsmith1180:
AndrewG:
Grumpy Dad:
bigtwister:
Day work Mon-Fri PAYE is £27k…Quoted £120 day rate as ltdAre you claiming VAT on top of that ?
VAT reg on 27K?? The threshhold is 85K…
27k PAYE works out at £103.83 a day, on which you will pay tax and NI and Pension. At that PAYE rate and £120 a day Ltd.Co. the driver is £2.68 a day better off gross than the PAYE bloke or £696.80 a year assuming no extra days are worked overtime.
A PAYE driver will take home £21,423.68 if auto-enrolled at 1% into a pension.
The Ltd Co driver can pay himself £16,099.68 without paying a penny in Income Tax, (Will pay £400.32 in NI though) 260 days x 120 a day = £31,200 a year so £15,100 left to get out, guesstimating here 35% total deductions, (depends on your tax code etc,) means say another £10k into the drivers sky-rocket. Ltd Co takes home £26,099.68 and is £4,676 a year better off.
Or you can fight smart and have the company pay your mobile bill, as its a business asset. £600 a year out of the company with no tax. Give the company an office in your house, charge it rent at £300 a month. Thats another £3600 a year out of the company. Need a new laptop? Business asset, business buys it. There are some who go too far in my opinion and count date night with the Mrs as Corporate Entertainment and claim that back. To me thats out and out tax fraud but some can justify it.
Andrew, yes, VAT on £27k. We have the flat rate scheme which used to mean that you could charge VAT on sales and keep a portion. Until April 2017 it was 10% so on a £100 invoice you would charge £20 VAT but only pay £10 to the VAT man. This year it changed so that if you are a low costs business, eg spending less than 2% of turnover on stock, which an Ltd Co. driver would be, you pay 16.5% to the VAT man so £16.50 to him and only £3.50 extra to you. It doesn’t make sense to be VAT registered anymore unless you own vehicles.
How Ltd driver can claim 16000.Personal allowance just about 11000
Andrejs:
How Ltd driver can claim 16000.Personal allowance just about 11000
By opening watermelon with scissors.
Thank you please.
£11500, tax personal allowance + £5k dividend allowance - National insurance gets you to £16k with no income tax.
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bigtwister:
scottie0011:
bigtwister:
Day work Mon-Fri PAYE is £27k…Quoted £120 day rate as ltdSo for a 15 hr day your getting £8 an hour, stuff that, day rate i’d be looking at at least £180.
Yeah know that…but was told no 15 hr day… 8-11 hr days
I hope they’re lying to you and it’s 15 hour shifts…way too cheap!
nsmith1180:
Ltd Co takes home £26,099.68 and is £4,676 a year better off.
.
Very nice. Now where in your calculations is the holiday pay that you don’t get? That is worth an additional 12.7%. Remember that the PAYE driver will only be working 232 days for the same top line you’d have to work 260 days to get.
How do you get to £400 NI? No mention of employers NI. What about workplace pension or are you not bothering with that like you’re not getting paid holidays either, something which would actually be illegal?
Have you taken into account the new dividend tax rates? Where is your calculation for dividends or do you intend to leave the money in the Ltd Company forever?
Where are your costs for running the Ltd Company? Remember you have to keep track of WTD, you have costs for accountancy etc.
nsmith1180:
£11500, tax personal allowance + £5k dividend allowance - National insurance gets you to £16k with no income tax.
NI is due on all income above £133 a week.
Dividend allowance is being cut to £2000 from April 