Going Limited?????

UK PROFESSIONAL DRIVERS FORUMS THE UK PROFESSIONAL DRIVERS FORUM (INTERACTIVE)
1

As the bell has rung on my time with Norbert, I have been touring the agencies today and have more than once been told that I would be well served by going “Limited”.

One assumes this means that I will set myself up as a Limited Liability company, NSmith1180 Trucking Ltd for example.

If I do this, but am not an owner driver, what benefits would it give. What are the drawbacks?

Additionally, I run my own motorsport news website which I have been looking into turning into a registered Sole Tradership. If I went Limited as Nsmith1180 Group, with Trucking and Journalism as my two areas of operation, would this be OK? Would time spent working on my hobby, the website, then count against me for WTD purposes?

And before anyone recommends it, I don’t have enough money to buy a V8 Topline, not that I would want one.

2

Some of the main benefits to going LTD over being a sole trader, are that your Pension stamp is paid in the same way as employed workers, instead of having to be paid out by yourself at set intervals. And if it all goes a bit Costa Concordia, unless you are proven to have been negligent with the finances, they can’t relieve you of your house to chase the companies debts.

3

A PM to the motorsport website might be useful to me.

Ken.

4

nsmith1180:
As the bell has rung on my time with Norbert, I have been touring the agencies today and have more than once been told that I would be well served by going “Limited”.

One assumes this means that I will set myself up as a Limited Liability company, NSmith1180 Trucking Ltd for example.

If I do this, but am not an owner driver, what benefits would it give. What are the drawbacks?

Additionally, I run my own motorsport news website which I have been looking into turning into a registered Sole Tradership. If I went Limited as Nsmith1180 Group, with Trucking and Journalism as my two areas of operation, would this be OK? Would time spent working on my hobby, the website, then count against me for WTD purposes?

And before anyone recommends it, I don’t have enough money to buy a V8 Topline, not that I would want one.

Benefits.
You will be an employee of the company and will be paid as an employee (hgv driver) which entitles you to claim working and family tax credits, bank loans etc are easy because you are an employee.

The company can register for vat and flat rate vat… which gains a 8% increased income for the ‘transport’ company.

You can choose the days you work or don’t work, and can sign up and work with several agencies in the same week.

It is probably the best way to make the most money for the least amount of work on the days you choose to work as a driver in the uk… but you need to be in the right area to get the right work.

There are loads more benefits than pitfalls.

Pitfalls
You need to invoice every week… its a pain… especially if you have done 75 hours that week… but 75 hours equates to £1000 plus for 6 days work… so you do it!

You have to do a vat return online every 3 months… its easy to calculate yourself with the booklet they give you.

Your company will pay an accountant around £500-£700 per year, a good accountant will save your company money.

You are better off keeping the two businesses separate… and my advice is to never call your limited company after your own name or have any reference to haulage in the name… it causes complications in the future…

I’m using my phone to type this and my finger hurts so i’m going now… good luck

5

Yes, basically not only do you not pay any tax but HMRC give you £300+ in tax credits every month, so all in all it’s worth about £700+ a month in your pocket, even if you aren’t an owner-driver.

I play the same game myself and while I don’t think it’s right, it was invented by people far higher up the food chain than I am, so who am I to argue with it?

It’s about £12.99 or something to form a limited company online and takes about 20 minutes, I would certainly recommend doing it.

6

contractdriver:
my advice is to never call your limited company after your own name or have any reference to haulage in the name… it causes complications in the future.

I can understand the comment about an agency driver calling yourself “Something Haulage” or transport, but I’m puzzled about why you shouldn’t use “Your Name Ltd”, I’m sure you’re probably right but it would be interesting to hear of any reasons for not using your own name.

7

tachograph:

contractdriver:
my advice is to never call your limited company after your own name or have any reference to haulage in the name… it causes complications in the future.

I can understand the comment about an agency driver calling yourself “Something Haulage” or transport, but I’m puzzled about why you shouldn’t use “Your Name Ltd”, I’m sure you’re probably right but it would be interesting to hear of any reasons for not using your own name.

That’s the bit I can’t understand either - ours is named after my Dad, no mention of Haulage, Transport, Distribution, Solutions, Logistics or Trucking, but still under the name.

8

Harry Monk:
Yes, basically not only do you not pay any tax

Sorry but that is a bit misleading. You as an employee of your Ltd company can do it in such a way as you pay no income tax however you will pay tax on any dividends you draw and your Ltd Company will pay corporation tax on money you don’t draw as a wage and isn’t an expense. Dividends are paid out of post tax profit.

9

tachograph:

contractdriver:
my advice is to never call your limited company after your own name or have any reference to haulage in the name… it causes complications in the future.

I can understand the comment about an agency driver calling yourself “Something Haulage” or transport, but I’m puzzled about why you shouldn’t use “Your Name Ltd”, I’m sure you’re probably right but it would be interesting to hear of any reasons for not using your own name.

The reason i say this is because the average person doesnt know the difference between a ‘self employed sole trader’ and ‘limited company’… heres a scenario… you go into a phone shop to get a contract phone (as an example) your name is john johnstone and your company is called john jonstone ltd… they assume and seem to insist that you are self employed and want to see 3 years accounts etc and it doesnt matter how much you try to explain… they just dont get it!.. if john johnson called his company ‘smith ltd’ or ‘hugh jorgan ltd’
and he was asked who he worked for they wouldnt bat an eyelid and process your personal phone contract as an employee of ‘hugh jorgan ltd’… believe me… i have been there! … when limited… you are never ‘self employed’… you are an employee of the company…

this has been typed on my phone again and i cant delete the word below … doh!

…the

10

Conor:

Harry Monk:
Yes, basically not only do you not pay any tax

Sorry but that is a bit misleading. You as an employee of your Ltd company can do it in such a way as you pay no income tax however you will pay tax on any dividends you draw and your Ltd Company will pay corporation tax on money you don’t draw as a wage and isn’t an expense. Dividends are paid out of post tax profit.

this is the bit that baffles me. i have a personal account and a business account. my company pays me x amount per hour that goes into my personal account so what happens to the rest of the money in my business account if i cant offset it with business expenses?

im am seeing my accountant next week to finally upgrade to ltd company but this is one of the things that has always put me off. the other thing is writing contracts with clients. agencies are all pretty standard but when cutting them out i dont want to drop myself in it with insurance liabilities, fuel responsibilities etc etc etc

11

Am I reading this right?..

You’re ‘cutting out’ the agency / middle man?

12

Scanny you don’t actually need a contract but terms of business do help

Sent from my Windows Phone 8X by HTC using Board Express

13

Also you pay corperation tax on any profits of the company legally you will not be an employer you will class as a company director and will still have to fill out a selfassemt for tax purposes though your accountant will be able to do this for you

Sent from my Windows Phone 8X by HTC using Board Express

14

Okay… the confusion begins! :smiley:

My username contractdriver is just that… a username.
I’ve never had a contract for driving work in my life.
Many years ago, before agencys became ‘professional’ I hired my driving services out to owner drivers and haulage companys as a ‘Casual’ driver either on a day rate, week rate or trip rate if i was doing international work.
Over the years things have changed and about 8 years ago i formed a Ltd Company (as a haulage company) and registered it for VAT as a haulage company and all my work comes from agencies.

The company pays me a fixed weekly wage of which i pay tax and national insurance on every week regardless… if i work 1 day, 3 days, 6 days or take 2 weeks holiday i still get paid every week.

I claim my subsistence expenses from as agreed by hmrc, digs money £33.85 per day, meal allowance of £25 per day (company agreed p11dx with hmrc) and other incidental expenses i am allowed which add up to about £7 without having to provide recipts.

Mobile phone, internet, laptop etc are all bought by and provided by the company.

I run my agency driver services limited company in the same way any limited company is run… i legally have to do this, the money the company has earned is the companies… not mine, if i just take a ‘few quid’ for myself… i’m technically stealing money from the company.

Corporation tax is paid on any profits the company makes and employers national insurance is paid on my wages by the company.

I will be employed for as long as my company exists… and will never lose my job!

If a limited company pays a wage, the recipient is an employee regardless of your ‘position’ in the company… if you call yourself a managing director, director, cleaner or whatever.
To claim lorry drivers subsistence you must be employed as a lorry driver!

I’m ‘just’ a driver… not an accountant… and i might be talking bollox… anyone thinking of going ltd needs to speak to an accountant. :grimacing:

Col

P.s. i’ve never, ever filled a self assesment out… because i’m not self employed.

15

I refer the OP to the standard answer that should be given in all cases …before going off at the deep end, go attend a couple of FREE courses run by HMRC hmrc.gov.uk/bst/
They wont bite ya, and you may learn how to do things right, (yeah right, we drivers are a stuborn bunch & dont want to be told how to do it etc)
Then bring that knowledge back here and ask the questions to fill in the gaps, then IF the OP is armed with the knowledge and enough confidence …do it
if it doesnt feel right for them... dont. As all they`ll have invested by this point is 4-8 hrs of their time.

I know of several drivers who have rushed off and gone S/E after being told by the agency its adventagious, or the only way theyll get work, only to regret later that S/E isnt for them

contractdriver:
Okay… the confusion begins! :smiley:

My username contractdriver is just that… a username.

Phew … that clears that up.

Its a good job I didnt call my company Peirre Obollox Ltd or Peirre Ball Ltd :laughing:

16

scanny77:

Conor:

Harry Monk:
Yes, basically not only do you not pay any tax

Sorry but that is a bit misleading. You as an employee of your Ltd company can do it in such a way as you pay no income tax however you will pay tax on any dividends you draw and your Ltd Company will pay corporation tax on money you don’t draw as a wage and isn’t an expense. Dividends are paid out of post tax profit.

this is the bit that baffles me. i have a personal account and a business account. my company pays me x amount per hour that goes into my personal account so what happens to the rest of the money in my business account if i cant offset it with business expenses?

Basically you’ll pay 20% corporation tax on the business profit (income less expenses which include your wages but not dividends). You then either draw the money from the business as a dividend which attracts tax at 10% up to £34,370, or leave it in the business account but you cannot draw on it for personal use.

This is why I can’t understand why people go ltd as a self employed driver. There is no advantage over sole trader other than a protection from business debts. Dividends are taxed less but they are taken out of a Ltd company’s post tax profit so if you have a £10,000 profit which you draw as a dividend paying £1000 tax on it, that amount will have already been taxed £2,000 corporation tax so on that £10k you’ve paid the same in total as if you’d earned it as a sole trader paying income tax and Class 4 NIC on the same amount. Any expenses you can claim as a Ltd company you can claim as a sole trader.

17

conor you know your stuff on this subject, how about claiming this aswell as meal allowance.

Incidental overnight expenses

This guide explains the reporting, tax and National Insurance contributions (NICs) requirements if you pay for the incidental expenses incurred by an employee while staying away from home overnight on business.

On this page:
â– Up to £5 per night (£10 for travel outside the UK)
â– More than £5 per night (£10 for travel outside the UK)
â– Understanding the £8,500 threshold

Up to £5 per night (£10 for travel outside the UK)

Definitions or restrictions

You pay no more than £5 per night (£10 per night for travel outside the UK) to cover incidental non-business expenses incurred by an employee while travelling overnight on business. Examples of incidental expenses include:

  • buying newspapers
  • paying for laundry
  • phoning home

taken from here…

http://www.hmrc.gov.uk/paye/exb/a-z/i/incidentals.htm

18

peirre:
I refer the OP to the standard answer that should be given in all cases …before going off at the deep end, go attend a couple of FREE courses run by HMRC hmrc.gov.uk/bst/
They wont bite ya, and you may learn how to do things right, (yeah right, we drivers are a stuborn bunch & dont want to be told how to do it etc)
Then bring that knowledge back here and ask the questions to fill in the gaps, then IF the OP is armed with the knowledge and enough confidence …do it
if it doesnt feel right for them... dont. As all they`ll have invested by this point is 4-8 hrs of their time.

I know of several drivers who have rushed off and gone S/E after being told by the agency its adventagious, or the only way theyll get work, only to regret later that S/E isnt for them

contractdriver:
Okay… the confusion begins! :smiley:

My username contractdriver is just that… a username.

Phew … that clears that up.

Its a good job I didnt call my company Peirre Obollox Ltd or Peirre Ball Ltd :laughing:

Lol :smiley: :smiley:

Well pierre… you joke about this… but my ltd company name is very similar… eg. It’s not Mike Oxlong Ltd not Huge Jorgan Ltd or Mike Hunt Ltd… but it’s similar :smiley: :open_mouth: …

Anyway, Ltd company worked well for me for the past few years, but rapidly falling rates and poor treatment of drivers has made me realise that the the whole lorry driving game in the UK has become an overregulated joke… so i’m gonna give Canada a try in about 2 weeks time… one life, live it… etc :grimacing:

19

peirre:
I refer the OP to the standard answer that should be given in all cases …before going off at the deep end, go attend a couple of FREE courses run by HMRC hmrc.gov.uk/bst/
They wont bite ya, and you may learn how to do things right, (yeah right, we drivers are a stuborn bunch & dont want to be told how to do it etc)
Then bring that knowledge back here and ask the questions to fill in the gaps, then IF the OP is armed with the knowledge and enough confidence …do it
if it doesnt feel right for them... dont. As all they`ll have invested by this point is 4-8 hrs of their time.

I know of several drivers who have rushed off and gone S/E after being told by the agency its adventagious, or the only way theyll get work, only to regret later that S/E isnt for them

contractdriver:
Okay… the confusion begins! :smiley:

My username contractdriver is just that… a username.

Phew … that clears that up.

Its a good job I didnt call my company Peirre Obollox Ltd or Peirre Ball Ltd :laughing:

Lol :smiley: :smiley:

Well pierre… you joke about this… but my ltd company name is very similar… eg. It’s not Mike Oxlong Ltd not Huge Jorgan Ltd or Mike Hunt Ltd… but it’s similar :smiley: :open_mouth: …

Anyway, Ltd company worked well for me for the past few years, but rapidly falling rates and poor treatment of drivers has made me realise that the the whole lorry driving game in the UK has become an overregulated joke… so i’m gonna give Canada a try in about 2 weeks time… one life, live it… etc :grimacing:

20

If I was to set up a Ltd company and become an employee of said company, drawing a salary of say £8000. I then let the tax credits office know of my new salary who then award me with x amount of tax credits per week.

If I then take dividends out of the company, how does that work regarding tax credits?