Thinking of going Ltd to do some part time driving, reason being my tax code in full time job is crippling 40% paye. So before im laid off is Ltd easy enough and whats the costs.
So anything i currently earn part time is in high tax bracket, if im ltd i think i can pay myself buttons and take it as a dividend
Geoff
£15 to set up a Ltd Co via Companies House website.
Various bits need to be done within certain time frames but they’re pretty good at walking you through it. Just don’t lose any of the codes they give you at various stages.
Getting a subscription to something like QuickBooks Online is well worth the £7 per month.
Yes you pay yourself buttons (but enough so the govt pay your NIC’s for you) and the rest in dividends. The rules on dividend tax have just changed though so look them up first before deciding.
Remember to put aside 20% of your turnover for corporation tax - you will get some of this back at the end of the tax year but better safe than sorry.
Factor in the cost of an accountant and remember no holiday pay, sick pay etc so factor this in as a cost too.
Keep on top of your books; you really don’t want HMRC sniffing around.
May be worth registering for the flat rate VAT scheme - personally I think it is a royal pita so haven’t bothered.
Do i need an accountant, or is it just sending in forms at end of year to hmrc and companies house
I’m using xero atm to keep receipts and run payroll not sure if I’m doing it right but its working ok for me
You do need an accountant to do Companies House accounts and having one on tap is useful as and when questions arise.
The day to day bookkeeping and payroll is easy enough to do yourself and make sure you report correctly to hmrc. Even as a director you essentially employ yourself on PAYE but pay a nominal amount.
As I say lots of form filling and registering on this and that govt ‘gateway’ but easy enough to do if you read up on it
If it’s short term your going to do this for you it wouldn’t be a good idea as records have to be kept for at least 7years
geoffwales:
Thinking of going Ltd to do some part time driving, reason being my tax code in full time job is crippling 40% paye. So before im laid off is Ltd easy enough and whats the costs.So anything i currently earn part time is in high tax bracket, if im ltd i think i can pay myself buttons and take it as a dividend
Geoff
HMRC have already thought about that one. Your dividends will still effectively be taxed in the high tax bracket. Dividends are paid out of post tax profit so there’s already been 20% corporation tax applied to the money the ltd company has earned and paid out as a dividend. As a higher rate tax payer you pay tax on the dividend and get a dividend tax credit (to prevent double taxation of the first 20% of earnings) which results in a net tax rate of 25% on the dividends so overall the rate of tax on the money earned by the ltd company, made up of a mix of corporation tax and dividend tax, is 45% in all. So basically as a higher tax rate payer you will pay 5% more doing it that way than you would on PAYE. But it doesn’t end there…
As mentioned there’s no holiday pay so you kiss goodbye to 12.6% of your income as Ltd. If someone is on PAYE at an agency on £10/hr and someone is on agency on Ltd Company at £1/hr more as is usually the case then because the PAYE person gets holiday pay on top of their hourly rate the person on PAYE is typically at least 2.6% better off than the person on Ltd assuming the person on Ltd is doing all their accountancy/invoicing themselves and draws everything as a dividend. The break even for Ltd over PAYE is typically 30% more than PAYE rates.
Costs vary quite wildly depending on how much of the work of running a company you do yourself. If you hand over the invoicing and book-keeping to a company/accountant you’re going to be paying more than a grand more than if you do it yourself and just get an accountant to certify the books at the end of the tax year.
tl;dr Going Limited is easy enough but as a higher tax rate payer its going to end up costing you between 7.5%-10% more than being on PAYE and paying 40% tax on everything you earn.
For occasional or part time work I doubt it would be suitable to go Ltd.
Likewise if the idea is only for work in the sort term, I doubt it would be a good idea.
Conor has already outlined the issues with dealing with someone on higher tax rates.
I was told I had to start self emp’d role after 8 weeks a pref a ‘LTD’ company !
This is at COOP dist at Lea Green …
Anyway I have a accountant and he does the vat and esp for me 
I’m guessing you where told to go S/E by the agency??