Hi all. As u figured i’m new in this group. I want to hear your opinions. How is better as a newbie what version to go on to? Paye/umbrella/ltd/ or se?. Pls excuse me if is a stupid question but i do not know which path to choose. And i tried to look here on forum but couldnt find a straight answer. Thank you all for understanding.
If you do a search on here there has been numerous posts on this subject with various answers.
all depends on hourly rate, to make umbrella worth it you need to be £10ish + an hour, Under £9 found PAYE worked out better. Currently on umbrella and total deductions are about £100 p/w, thats fee’s, tax, pension etc etc.
Pressume you are planning to work through an agency and that is why you are asking.
PAYE - straight forward if direct with agency just like working for any other company pay less deductions tax ni. Should get holidays paid by agency, dont hold your breath. Only gets slightly more complicated if you work for more than one agency at once. You will need to do a personal tax return probably to get your tax straight.
Self employed - You just invoice agency for hours you work, keep your own books do your own tax and ni. Not many like this any more because of IR35 (big issue not for here, google it). Prefer Ltd.
LTD - set up your own limited company (£15?) and invoice agency for work the company does. Pay your self min so no tax and rest as dividend for tax efficency. Loads of costs can be off sett against tax, Saves me about £2k a year against PAYE. Quite a bit of paperwork but nothing to daunting really.
Umberella - Different thing entirely. If an agent is a parasite these boys are the parasites parasite. Umberellas provide payment services for agencies taking the responsibility off them, for a fee obviously that you will be expected to pay. PAYE it seems to be becoming the norm. Agencies like it because it provides a barrier between them and HMRC and their many legislations try to make them more responsible to the worker. It’s an added expense to try and avoid.
This is how i have deal with this problem. I went LTD, for tax efficency. You get a better rate but never enough to cover anything really. If an agency won’t pay me direct (Most are happy to do this as long as you are ltd) i wont work for them.
Only real options where u dont get shafted is PAYE direct with agency or LTD as i see it, be nice to be just self employed but not many will do it without the umbrella buffer.
Hope this helps, happy to be corrected on any of the above just the bones of how i operate. Happy to answer any questions, if its detailled PM me as not willing to talk specifics on tax etc on public forum.
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And btw. Can anyone recommend a good accountant. I decide to go on ltd way but i want some advice first. Thank you all
And… what is better on ltd with the spendings for the car that i use ? Use the 45 pence a mile way or just put the bills from my car ( insurance diesel tax repairs). Thank you
sfantu:
And… what is better on ltd with the spendings for the car that i use ? Use the 45 pence a mile way or just put the bills from my car ( insurance diesel tax repairs). Thank you
You can claim £0.45p per mile for the first 10,000 miles then £0.25p after that until the new tax year starts April 5th… then it’s back to £0.45p again. I don’t think you can claim for car expenses that you mentioned but if this vehicle was solely for business use by the Ltd company then perhaps it’s possible. A good accountant can point you in the right direction there.
You can claim all business expenses from the company. This includes accountants fees, protective clothing, stationery, subsistence (£5 for the 5 hour rate, £10 for 10 hours etc) and this will all offset your yearly tax liability. There’s other things you can claim and again, an accountant will help with this.
The company pays you a yearly salary less than £10,000 which will keep you within the tax bracket… your tax code will be 1000L. To top this up, the company pays you a dividend weekly/monthly/yearly, however you prefer. It’s not that difficult to run a Ltd company as long as A) you’re sensible, B) you pay a good accountant and C) keep a record of everything you do.
If anyone can add to or correct any of this, I’m all ears… I’m still finding my way round it myself…!
Thanks for replay. I spoke with one and explained me pretty much all. Still not sure about those 5 or 10 £ as you said. I dont see the relevance with that…
Be really careful with the £5/£10 subsistance. RHA have applied for this through HMRC but it is not clear cut.
You have to apply for the right to use this allowance and there are the usual 100’s off rules applying to it.
I applied and got rejected. From my ruling and appeal this does not apply to single director ltd companies where it is the director claiming the expense. It’s dead complicated and not going to bore people here.
Top and bottom is if you are claiming this allowance because someone said you could, you are commiting tax fraud. To be able to claim this allowance you need written acceptance from HMRC with an approved start date.
Happy to share information on this by PM if anyone needs to know anything.
BTW its a bloody scandal that i cant claim it but can employ someone and they could get it. Go figure…
So than put my wife director and I as driver 
))))). Thanks for tip… my accountant said she is going to enquire further for this issue. Im the first one who asked her this