I know there have already been lots of topics on the pros/cons of LTD vs PAYE, but I’ve got a slightly more specific question.
Agency I’m working for offer the option of going LTD but with the support of a third party. This third party give advice on what can be claimed back and also send you a text each week advising exactly how much of your pay you need to keep back for tax.
Additionally, they offer you public liability, professional indemnity, and negligence insurance. My understanding is that negligence covers damage to the company’s vehicle but not, for example, street furniture. The chap I spoke to advised me that the latter would likely be covered by the public liability and when I asked about 3rd party vehicles he said that it would likely also cover this as technically it’s public property (but added the caveat that he isn’t fully qualified to advise on the many legal particularities).
I’m just a little concerned as obviously this guy’s job is to sell the company’s services to people like me.
A quick Google search brings up plenty of horror stories in which LTD drivers have been landed with liability for hefty sums, but on the other hand I’m assuming that many of them weren’t covered by the policies of a third party.
You are very right to be wary, as you say they are trying to sell a product but can’t confirm basic but essential details. They either don’t cover it or are too incompetent to know. Neither are good options.
I would avoid the whole text message advising you on tax due each month - it is likely a simple automated text
You will need a chartered accountant anyway for the end of year submissions, so might as well make use of it in regards to tax and advice etc.
Personally, I would be very wary of any agency offering financial products (insurance etc) I would google it myself and find out what covers are required by law and what are recommended and go from there - That way you are in control of each policy and if you need anything changed/altered etc - There should be less surprises later on should you need to make use of the insurance cover
The company offering the insurance isn’t the agency but a company they use. They set up a LTD company on your behalf and help advise on the tax…for a small fee.
The situation is that the agency told me it’s £12.50 p/h but are now (after me having passed a four hour assessment/induction) saying its actually £11.50 and the former is for LTD. This is clearly bull as I’ve checked the original advert and it says £12.50-£14.
Reason for looking for another agency is that the previous one kept only offering me 3-4 days a week, but I’m now thinking that there’s no point working five days at a lower wage (compounded by this contract being 8-9 hour days rather than 10-11).
Tempted to be stubborn and say “it’s £12.50 or nothing” but in reality £11.50 is still pretty decent for class 2. It’s just a matter of principle at this point tbh.
Tailschwing:
The situation is that the agency told me it’s £12.50 p/h but are now (after me having passed a four hour assessment/induction) saying its actually £11.50 and the former is for LTD. This is clearly bull as I’ve checked the original advert and it says £12.50-£14
Work it out and you’ll find that if you’re only getting an extra £1 per hour for going self employed you’re financially better off staying on PAYE.
All this Ltd company craps is for the agencies benefit not yours.
Having said that it sounds like they’ve led you up the garden path anyway so maybe best avoided.
Stay away from this mate, it’s just another layer of leeches trying to feed off you.
Liability insurance is not for traffic accidents, that’s what motor insurance is for.
Whoever owns the truck you are driving will be fully comp covered and will have public liability cover as well should it be needed.
PAYE all day long compared to schemes like this which will only end up screwing you over at some point
Honestscott76:
“Limited Company” you personally have no liability. All liability lies with the company.
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So what happens if you write off a new BMW and the company can’t afford to cover it? Would you declare bankruptcy? This is all new to me.
The debt would die with the company, as long as you are set up as a Limited Company and NOT self employed.
If you set up as self employed, the debt can be transferred on to you personally
Morally questionable…But what you could do is create 2 companies. First company could be called ABC logistics which you would make sure had no assets. and then you would have XYZ Logistics which would be the parent company of ABC logistics, this would hold any company assets etc. You would be a director of both companies but do your business through ABC. That way if there was ever a crash and a problem with the company being held liable, you could simply close down ABC logistics on Friday and start up with another company on Monday, again with the same parent company XYZ Logistics. That way your assets are safe in the parent company and wouldn’t be held liable for losses etc.
It would mean filing 2 sets of taxes at the end of the year though and it can be a bit messy so you would likely be heavily reliant on a decent chartered accountant
Hyh:
Morally questionable…But what you could do is create 2 companies. First company could be called ABC logistics which you would make sure had no assets. and then you would have XYZ Logistics which would be the parent company of ABC logistics, this would hold any company assets etc. You would be a director of both companies but do your business through ABC. That way if there was ever a crash and a problem with the company being held liable, you could simply close down ABC logistics on Friday and start up with another company on Monday, again with the same parent company XYZ Logistics. That way your assets are safe in the parent company and wouldn’t be held liable for losses etc.
It would mean filing 2 sets of taxes at the end of the year though and it can be a bit messy so you would likely be heavily reliant on a decent chartered accountant
PAYE is much easier when starting off.
This is not morally questionable, it’s morally decrepit.
How many people on here have been affected by just this type of phoenix, shutting their doors one day and opening the next after dumping all their debts.
This is straight from the scumbag parasite rulebook and is how people like Donald trump stay rich, at the expense of others (he has done this several times forcing hundreds of small businesses to go under to keep him in his solid gold toilet seat lifestyle).
And for the record, as a one man Ltd company doing agency work, you will never have any “assets” to protect. And this type of arrangement would cost a lot more than £1 an hour in accountant and solicitor fees. Never mind selling your soul to the devil.
Being a LTD company in this way for an agency gives you all the headaches and responsibilities of running a business but with none of the benefits, and is only to benefit the agency.
If you were tempted however, please don’t go in with the mindset of trying to absolve yourself of responsibility towards any debts and liabilities that may arise. Run your business honourably, take precautions to avoid potential liabilities from occurring, pay your debts, be correctly insured, be one of the good guys. Not entitled scum that are happy to trample on innocents in order to line their own greasy pockets, such as the agencies that propose these schemes
I’ve decided it’s not a great idea setting up a LTD company to obtain a pay rate I was initially promised via PAYE. For any given salary I would think you’re better off being on PAYE, which is presumably why LTD is almost always a higher rate.
That said, I’m still interested to investigate it further. I was contacted about a trunking job today which sounds interesting. 1-4 drops of palletised bulk parcels to depots with everything forklifted off. Certainly sounds better than ■■■■■■■ kegs like I was today.
However, PAYE is £11 whilst LTD is £14.27. I’m not sure that it’s worth the hassle of going LTD for an extra quid an hour, but £3.27 is quite an increase! The guy I spoke with reckons I’d be covered by his negligence insurance but said he’ll double check.
I worked it out a while back and roughly you need to be on roughly 26-28% extra vs PAYE to make it work out.
That excludes claiming back your mileage, shared utilities at your home, PPE etc and was based on the £5K/year dividend tax free allowance, I believe that has changed to £2K now though…?
Being Limited company, you may have a broader range of pension options too.
A chartered accountant could advise further in what to claim back and how to pay yourself the most tax efficiently etc, I would expect to pay £1K+ for a good one including end of year filing - I’m not sure if you are able to claim accounting fees back… You will want to make sure you are outside of IR35 regulations and what the realistic implications of that are.
I know a few drivers and non drivers as contractors for company/agency that are happier now than when previously on PAYE
Edit: The above assumes LTD and not working via Umbrella which is a different kettle of fish altogther
Thanks bud. Still a little concerned about the insurance side of things. Could obv put together some T&Cs from a template but can’t see most agencies wanting to sign them.
What do most LTD drivers do in the event of an accident?