the sticky situation im in, I was made redundant January 5th, an been looking for work since, no joy, but ive decided to go an sign up with 3 different agencies for work cause at least 1 of them will ring each week. all im asking is what are the pro’s an cons to going LTD company as a lot of drivers have told me to do this. I kind of the route I need to take like getting an accountant. but I don’t know the rates for a class 2 driver or a class 1 driver p/h VAT registered. north west area could any of you help me out?
None. Virtually everything you can claim as Ltd can be claimed on PAYE via P87.
Cons:
Usually get paid a quid an hour more than PAYE which in no way covers your holiday pay you don’t get or the employers NI you have to pay nor the accountancy/umbrella fees - you want at least 25% more than PAYE rates or ideally 30% more at a minimum so if they pay PAYE £10/hr you want £12.50-£13.
No employment rights. Well no, this isn’t entirely correct although the reality is. You do have employment rights as an employee of your own Ltd company but it is your own company, i.e YOU, who you would be claiming against.
No right to even be paid.
If you’re using an umbrella company or paying an accountant to do the weekly invoice they’ll charge the same every week whether you work 1hr or 100hrs so if they charge £20 a week and you have a really crap week and only do one 8hr day and make £80 they’ll still charge £20 leaving you earning below NMW.
Doing it to maximise income using expenses etc will minimise taxable pay which is what lenders (loan, credit card, mortgage) use to decide if you can afford to borrow what you’re asking. They don’t take into account expenses nor dividends, only taxable income.
For doing it direct with haulage companies it makes sense if for no other reason than to minimise your liabilities.
None. Virtually everything you can claim as Ltd can be claimed on PAYE via P87.
Cons:
Usually get paid a quid an hour more than PAYE which in no way covers your holiday pay you don’t get or the employers NI you have to pay nor the accountancy/umbrella fees - you want at least 25% more than PAYE rates or ideally 30% more at a minimum so if they pay PAYE £10/hr you want £12.50-£13.
No employment rights. Well no, this isn’t entirely correct although the reality is. You do have employment rights as an employee of your own Ltd company but it is your own company, i.e YOU, who you would be claiming against.
No right to even be paid.
If you’re using an umbrella company or paying an accountant to do the weekly invoice they’ll charge the same every week whether you work 1hr or 100hrs so if they charge £20 a week and you have a really crap week and only do one 8hr day and make £80 they’ll still charge £20 leaving you earning below NMW.
Doing it to maximise income using expenses etc will minimise taxable pay which is what lenders (loan, credit card, mortgage) use to decide if you can afford to borrow what you’re asking. They don’t take into account expenses nor dividends, only taxable income.
For doing it direct with haulage companies it makes sense if for no other reason than to minimise your liabilities.
Once again Conor knows everything and is always right, before making sweeping statements like that you need to make sure what your writing is correct because in this instance its not. Especially in the case of mortgage lenders because they do take into account salary AND dividend payments when doing your affordability check. You are right about not including expenses though. You might not have the whole market available to you but you will have plenty of choice. You will need at least a years worth of accounts, although in reality to get as competitive a rate as any employee could get then 2 years plus of accounts is enough and then it comes down to the same factors as anyone applying for a mortgage such as credit record, size of deposit, loan to value, etc.
Since I’ve been a Ltd Company I have managed to obtain a mortgage, taken out car finance to upgrade my car and had 3 new credit cards no problems.
nedflanders:
TM did you get mortgage in your own name or company name ?
Just in my own name, I went through a mortgage broker which cost me £500 (£250 up front and £250 once the deal had been accepted), I could of gone to the lenders directly but thought the £500 was worth it just to make sure.
, Why are you surprised, he knows everything remember.
this is what gets me is when drivers come in and ask me questions about it during registration, i aint fsa trained so any ‘advice’ is my own opinion rather than fact.
having not worked as a ltd driver but with so many out there i assume it has pro’s and con’s. My own choice if i went back driving would be Ltd as i tend not to take a huge amount of holidays but more as time off when driving and would rather work more 3/4 day weeks with the extra cash in my back pocket than built up as a holiday pot.
Exactly, while this forum can be good for getting advice and tips on certain aspects and things to do with the job there is an awful lot gets asked where the person asking should really be seeking professional advice on whatever subject they want to know and not taking the word of someone’s opinion on the internet. Particularly when it comes to anything like this topic.
for anyone going ltd or thinking i always will give my bit but as you say they need to really discuss with an accountant 1st.
i also know a couple that due to bad credit history have been refused business accounts etc which while i am sure there will be bad credit syle ones about it just shows how its not quite as easy as you may think.
None. Virtually everything you can claim as Ltd can be claimed on PAYE via P87.
Cons:
Usually get paid a quid an hour more than PAYE which in no way covers your holiday pay you don’t get or the employers NI you have to pay nor the accountancy/umbrella fees - you want at least 25% more than PAYE rates or ideally 30% more at a minimum so if they pay PAYE £10/hr you want £12.50-£13.
No employment rights. Well no, this isn’t entirely correct although the reality is. You do have employment rights as an employee of your own Ltd company but it is your own company, i.e YOU, who you would be claiming against.
No right to even be paid.
If you’re using an umbrella company or paying an accountant to do the weekly invoice they’ll charge the same every week whether you work 1hr or 100hrs so if they charge £20 a week and you have a really crap week and only do one 8hr day and make £80 they’ll still charge £20 leaving you earning below NMW.
Doing it to maximise income using expenses etc will minimise taxable pay which is what lenders (loan, credit card, mortgage) use to decide if you can afford to borrow what you’re asking. They don’t take into account expenses nor dividends, only taxable income.
For doing it direct with haulage companies it makes sense if for no other reason than to minimise your liabilities.
This information is incorrect. If you register with HMRC as an employer, the first £2000.00 of employers NI contribution does not have to be paid.
tmcassett:
Since I’ve been a Ltd Company I have managed to obtain a mortgage, taken out car finance to upgrade my car and had 3 new credit cards no problems.
Don’t doubt it however I suspect that you’re getting a bit reamed on the interest rate and are paying a bit more than 1.75%.
Coincidentally I had a meeting with a mortgage advisor earlier so can shed some light on some of the issues raised in this thread as I asked about it because of my personal circumstances.
The advisor said that for self employed drivers it can be problematic getting a mortgage if you use fancy accounting to reduce your taxable pay. She did however state that they take into account dividends when deciding how much you can borrow. It’s more the expenses they use to reduce your pay so if you’re earning £500 a week but writing £100 off as expenses then they’ll only lend to you based on a £400 salary.
Total pay including dividends were OK but they wanted to see at least 2 years worth of accounts, preferably 3.
, Why are you surprised, he knows everything remember.
this is what gets me is when drivers come in and ask me questions about it during registration, i aint fsa trained so any ‘advice’ is my own opinion rather than fact.