Setting up a limited company

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

Hi there

I am a new member. I have been a regular reader of the forum of the past 1 year or so. I am a qualified class 2 driver who until last week was working fulltime for a pallet line member for 5 months.
The job was ok but the hours and transport manager was a complete idiot. Less said about that the better. Its kind of put me off the trade to be honest with you, Not what i thought i was going into at all. Anyway i have left that company and i am now going back to work as a team leader in a warehouse where i was before i passed my test. The reason i am posting today is that i intend to still drive on Saturday and Sundays if the works there and the price is right. Problem i am having is that a lot of the agencies will not let me work on the books 1) because of the length i have had my licence 2)The amount of days i would be working for them. A few have requested that i start a LTD company up. I know the pro’s and con’s of this, holiday pay etc.

I have set a LTD company up with companies house, that has now come through. What else do i need. Do i need to register anything else, get goods in transit insurance etc etc. I know i need a company bank account. Any help on this would be greatly received, i am trying to do myself to keep the cost down, rather than going to a company that does it all for you for a set price.

Look forward to all your reply’s regarding this issue.
Thanks Dave

2
  • Get a good accountant (chartered only)
  • Get liability insurance
  • Might need to be VAT registered*
  • You’ll be liable for your employees & employers NI
  • Technically you dont unless you’re turnover above 85K but it could help.

Then consider:

The government was intending to make LTD contractors like this effectively impossible, but COVID got in the way. So expect that next year when you need to be PAYE.

It’ll likely cost a lot more in admin costs esp accountant for 1 days driving every 2 weeks. Accountant fees will cost a lot more.

Remember, if you work 5 days currently, you can work max of 1 day every other weekend. Really there aren’t that many class 2 jobs on a weekend (not an awful lot of class 1 really).

A heck of a lot of people have class 2 and they are all struggling for work on and off agency, with more licence experience. This is why agencies aren’t really interested, they have long term class 1 & 2 drivers coming out of their ears.

The main reason for LTD is they dont have to add to to PAYE, dont nedd to do any more than wait for an invoice from you then wait 30 days to pay you and in theory don’t have to add you to their insurance (you’re liable).

People like pallet networks are the best way to get experience even if they are run by a-holes sometimes. If you make more in a warehouse, I would stay there. Maybe in 5 years it’ll settle down.

3

For adhoc work it ain’t worth going Ltd, find an agency that will take you on via PAYE

4

dave1984:
Hi there

I am a new member. I have been a regular reader of the forum of the past 1 year or so. I am a qualified class 2 driver who until last week was working fulltime for a pallet line member for 5 months.
The job was ok but the hours and transport manager was a complete idiot. Less said about that the better. Its kind of put me off the trade to be honest with you, Not what i thought i was going into at all. Anyway i have left that company and i am now going back to work as a team leader in a warehouse where i was before i passed my test. The reason i am posting today is that i intend to still drive on Saturday and Sundays if the works there and the price is right. Problem i am having is that a lot of the agencies will not let me work on the books 1) because of the length i have had my licence 2)The amount of days i would be working for them. A few have requested that i start a LTD company up. I know the pro’s and con’s of this, holiday pay etc.

I have set a LTD company up with companies house, that has now come through. What else do i need. Do i need to register anything else, get goods in transit insurance etc etc. I know i need a company bank account. Any help on this would be greatly received, i am trying to do myself to keep the cost down, rather than going to a company that does it all for you for a set price.

Look forward to all your reply’s regarding this issue.
Thanks Dave

So, you have decided that a Ltd Co is the correct way to go? And have set up a company?

dave1984:
requested that i start a LTD company up. I know the pro’s and con’s of this,

Now you ask what to do next?
If you don`t know what the next steps are, and the expenses involved, do you really think setting up your business without such knowledge was such a good idea?

dave1984:
Not what i thought i was going into at all.

As Yogi Bera may have said, “It`s Déjà vu all over again”!

5

If it’s only cost him £12 for the online registration with Companies House then can’t really blame him for diving in. Strongly suggest you think it through before spending any proper sums though.
I’d have spent £12 for Ltd just to get a Makro/Costco card if I didn’t have another way of getting them

6

As others have said, a Limited company for working one day a fortnight might attract more admin/accountancy fees than income.
But, having your own company means you can do work (non-driving) whenever you want if you can find it.

My advice would be to make the company dormant, spend the next months cultivating contacts, knowledge of the trade and when you think it is worth it, make the leap of faith into becoming a director and all the responsibility this entails.

Oh, and don\t forget IR35 next year…

Cheers

Paul
(Director of a sleeping Welsh company :wink: )

7

peirre:
For adhoc work it ain’t worth going Ltd, find an agency that will take you on via PAYE

This 100 times over, theres more doing it now.

IR35 will be coming in in April next year, the Govt are in the proverbial and need income so will push this through. Currently shutting my LTD down (was in a different industry on a lot better rates, but thats been slashed and I hate the job now) and start full time PAYE on Monday. I’ve no intentions of ever going back LTD, and only went as it was the only way that company paid in that industry. You can make better money on it, but when you take it all into account it, personally, it isn’t worth the extra hassle.

8

The back room costs of running a Ltd company will outstrip the income gained from the adhoc work you intend to do

9

Besides the Ltd company which is not difficult, just one point I’m missing. If you are working in the warehouse Monday to Friday, and driving at the weekend, when will you be taking your weekly driving rest periods?

10

So. Let me get this right.

You are going back to working Monday to Friday, and then drive on a Saturday and Sunday?

Illegal.

You can’t work 7 days in a row legally. If VOSA catch up with you, expect tea and biscuits with the TC, and revocation of your licence.

And before anyone says, he can do what he likes, then that’s fine, but posting your intentions on a public forum, is not the cleverest of ideas.

Ken.

11

Hi there

Thank you so much for your reply’s. It was only ever intended for me to work the odd weekend, so would not be breaking the rules(rest periods etc)

After reading all your comments, i do not really think the whole thing is worth the hassle. Its just the agencies will not take you any other way these days for odd days here and there. I better just write the whole experience off as a complete waste of money and time and like one reply said, sit on my licence for 5 year . I only did the test in the first place because of the stated shortage of drivers. That usually means more money. Does not seem to be the case in real life. And as one reply said you are treated as a second class citizen and talked to like a discarded rag.

One thing is that its allowed me to see just how good my team leader job was that i had before i started out on my new career path, Lucky for me is that they never wanted me to go, and like i said i have been welcomed back with open arms. Nice to be wanted instead of it seems not wanted and just a piece of meat in the haulage industry right now.

I used to have an ethos that i was only as good a leader as my staff under me, i treated them well. That does not seem to be the case in haulage, just two arms and two legs. For any new drivers out there or potential drivers, i would think hard before diving in, I know from reading these forums, that mine is not an isolated incident, it seems the biggest percentage of companies treat you that way.

Anyway, slightly off topic. I respect all of your advice, just wish i would have asked before wasting £1500

Thanks again Dave

12

trevHCS:
You’ll be liable for your employees & employers NI

You will only pay employees and employers NI if your accountant is no good.

Normally, if your LTD company is your only income you would pay yourself your NI tax free personal allowance through your payroll which is £9,500 for the 2020/21 tax year (not your income tax free personal allowance which is £12,500 for the 2020/21 tax year) and then take the rest of your income in the form of dividends. If you pay yourself more than your NI tax free personal allowance through your payroll, you will pay employees and employers NI (so don’t do this!).

It’s usually best for LTD drivers to pay themselves once a year through their company’s payroll (in the last month of the tax year, ie. 6th March to 5th April). You need to phone HMRC to let them know that you are going to do this. Company directors are allowed to do this, and it means you can claim the whole £9,500 NI tax free allowance if your LTD company has been trading for the whole of the tax year. If your LTD company hasn’t been trading for the whole of the tax year, your NI tax free allowance is calculated on a pro-rata basis with part weeks rounded up to the next whole week, so that 8 days trading would give you a NI tax free allowance of (2/52)*£9,500 (ie. the 8 days would give you 2 weeks of allowance with the year considered as 52 weeks and not 52 weeks and 1 day or 52 weeks and 2 days in a leap year).

Make sure you only rely on official sources of information and not what I have written, as HMRC rules are extremely complicated and keep changing.

13

I don’t think you’ve wasted the £1500.
It’s now there as a safety net and gives you scope in the future.
The grass isn’t always greener though, as you found out.
I’ve been there and done that one twice.

14

I don’t see why anyone would consider setting up a ltd co based solely upon selling their own labour in the current uncertain circumstances. The government has made clear that there is minimal support for these people and see them and the self employed as a future target for raising additional revenue from taxation. I am hardly suprised either that the agency are dead keen, they have zero financial risk but access to significant labour availability while making money out of providing financial services to potentially dozzens of propective ltd co’s.

15

dave1984:
I respect all of your advice, just wish i would have asked before wasting £1500

Agencies may take you on after 6th April 2021 on PAYE, as most of the agency’s clients (if not all) will stop accepting LTD drivers.

However, as only an occasional driver, you might only be offered work during the summer holidays when lots of their regular drivers are taking time off work (hence they tend to be short of drivers at that time of year), and during the 6 weeks before Christmas (when it is traditionally busy for lorry drivers).

You might also be offered occasional short notice work at other times, but you would need to accept or the offers would soon dry up. Two refusals in a row often means no more offers.

Also, you will need to prove to the agency that you are a reliable and capable driver. They don’t want to lose clients because they sent an inexperienced driver. Agency driving is often difficult. First you won’t be experienced at that particular client, second you will often get the difficult jobs that the regular drivers don’t want to do, and third expect to be given the oldest and dirtiest lorry with the knackered gearbox.

16

carlston49:

dave1984:
I respect all of your advice, just wish i would have asked before wasting £1500

Agencies may take you on after 6th April 2021 on PAYE, as most of the agency’s clients (if not all) will stop accepting LTD drivers.

However, as only an occasional driver, you might only be offered work during the summer holidays when lots of their regular drivers are taking time off work (hence they tend to be short of drivers at that time of year), and during the 6 weeks before Christmas (when it is traditionally busy for lorry drivers).

You might also be offered occasional short notice work at other times, but you would need to accept or the offers would soon dry up. Two refusals in a row often means no more offers.

Also, you will need to prove to the agency that you are a reliable and capable driver. They don’t want to lose clients because they sent an inexperienced driver. Agency driving is often difficult. First you won’t be experienced at that particular client, second you will often get the difficult jobs that the regular drivers don’t want to do, and third expect to be given the oldest and dirtiest lorry with the knackered gearbox.

i feel you there, i was given a truck that humpty dumpty put together, hardly surprising been a new driver. A lot of sheds out there today, Nearly passed out with heat exhaustion during the hot period last month. Only one window would open, no air con, lumps missing in the seat, i think you get the message. i consider myself a capable driver now. just a shame i do not feel it anymore, if your not LTD you are over looked for the vast majority now anyway.

maybe i will do my class 1 and look again.

17

now youve set up on your lonesome and got some insider experience may be worth you fishing around for work and if theres any find/take on a subbie to actually do it while you stay in the team leader job

18

If you don’t mind saying, what part of the country are you in and which agencies have you tried?

I’m with a national agency that does PAYE and they’re happy with me doing 1 shift a week or 6 shifts a week - Zero pressure, just accept or decline the offered work - It does seem to be luck of who is running that agency office as to what experience you might get with them.

19

I can echo most of the advice here.

IR35 has been an onslaught for years and why I left contracting altogether as a Mechanical Engineer. There WERE advantages financially, but the HMRC don’t like that you use the law to make more money, despite still paying Corp Tax and Income tax. It has been the HMRC’s will to bend the rules to make you pay more and they got slapped by the courts, as they are just aiming at making us all PAYE! I think it was summed up quite nicely when they had to admit they didn’t even understand the rules themselves!

IR35 was really brought in to tackle the Software Engineers that were creaming £500 a day and paying less NI/Income Tax! The little man contractors all got ■■■■■■ over also because of them, rather than the HMRC focussing on foreign companies that use known loopholes to avoid paying Billions in Corporation Tax by moving their debt around…mention no names AMAZON/STARBUCKS! But they got let off because they build factories and employ UK workers.

I still have a LTD company and it’s VAT registered, but contracting isn’t my main business. There are specific rules to remain outside IR35, like business cards, embroidered workwear, mileage logs for personal vehicles, receipts for everything. In essence, you are not an employee - My day started as soon as I left my front door till I got home, I worked on projects with no set start/end times, I claimed mileage, food, clothing, tools, pint down the pub, training courses and £3 a week to use my home as an office. You can even claim 24p a mile to cycle to the site!

If you employed an accountant now, they would tell you if you’re setting up to run the business ‘driving’, you can claim back 3 years costs, so you would get back the tax on your training and carry over that cost as a loss incl any other courses you did, as long as you were running it as a business before your date of incorporation. Remember that the HMRC publish ‘guidelines’ which you would follow, but an accountant will say you can claim for everything and submit a return based on their interpretation, you then think you are in the money till you’re visited by HMRC.

You don’t need an accountant or a company bank account if you have a good understanding of Tax and Accounts/Bookkeeping/VAT/Banking. I do all of my Accounts/CT600/VAT returns/PAYE/Pensions and it can be a minefield, remember THEY make TAX TAXING despite their BS adverts! Having an Acct/Company bank account would cost me c£200 a month, not worth it for me at this time.

You just have to remember that the HMRC are a bunch of Accountants supporting the employment of other Accountants! If an Accountant on £80-120 a month makes a cockup in your figures and you sign it, you are in court not them!

My advice, for an extra £2-4hr and no holiday pay, is always go PAYE!