self employed or limited

[sima24]

Hi, im in the middle of changing from a sole trader to a limited company. However wondering if someone could clear up a tax question i have. Currently a builder i do a lot of work for pays my 20% through my utr number. If i went limited am i right in thinking i would have a company utr still at 20%? Does that mean i would lose 20% company tax then another 20% when i pay myself through the company. Though this sounded a bit high

 

[accordfire]

No, not right, strictly.

If your work falls within the CIS scheme, then you'll need to complete form CIS 305 to register the business. There is a guidance book, CIS 340 available here:

http://www.hmrc.gov.uk/forms/cis340.pdf

which gives some advice. However, as with all things tax, phone and speak to the HMRC helpline - CIS Help line is 0845 366 7899 and is open until 8pm and on Sat until 4pm.

Only one UTR would be required, if you fall within that scope as the way you pay yourself through a business would be different.

 

[Robert Turnbull]

I'm in the same boat was expecting to get gross payments but still been stopped via the company utr, from what I gather it all comes out in the wash at the end of the year.

 

[Octopus]

If companies pay you via CIS make sure they give you the relevent paperwork, else you will find youself docked 20% by the "employer" then another 20% by the tax man.

 

[tanna]

You will be stopped 20% Cis deduction on every invoice , you then claim all of this back at the end of tax year , as long at the client is doing ur tax each month, make sure u get cis deduction statements on every payment you have been stopped 20% on, at the end if the year you will revive you Cis rebate but out of this you will have to pay corporation tax on company profits, get ur self a good accountant and you will pay less tax than a sole trader, just make sure you have "expenses" coming out of ur company, of its all profit and you are drawing all the money out you will end up with a big tax bill!!!!!!!!! Hope this is clear for you, I went limited a few years ago and no one ever really explained it easily to me, it takes a while to understand how it works but it's fine

 

[sima24]

Thanks for the advice. Going to book a visit to see an accountant, see if they can work out if im better off as a sole trader or not, thanks

 

[Octopus]

If your net profit is over £30K then ltd is worthwhile, but your paperwork is greater and you need to be on top of it.

 

[pete555]

and don.t forget the VAT

 

[Octopus]

and don.t forget the VAT

Only if you are over the threshold.

 

[accordfire]

If your net profit is over £30K then ltd is worthwhile, but your paperwork is greater and you need to be on top of it.

You do need to be on top of paperwork for sure.

Having that issue with HMRC too as I seem to have inherited unpaid Corp Tax, and a few missing/incorrect VAT payments. I also seem to have a chunk of bad debt I'm going to have to write off .... which has implications for both.

None of which has stopped our beloved majesty's revenue and customs from writing to tell me they're happy to add fines for non payment all they want - on top of their "spin the wheel" assessment estimates....the good news is they tend to be more willing to listen these days.

And from April, it's just going to get better and better if you employ staff - RTI.... woo!

 

[Glamer]

Now i am inside the very same vessel seemed to be hoping to receive gross payments but nonetheless been stopped by means of this company, by exactly what My spouse and i accumulate everything happens inside the rinse towards the end on the calendar year.

 

[elliott76]

If you go ltd you will need an accountant as the admin is quite heavy.
From a tax point of view you will become an employed director of your business, you will draw an income just below the personal allowance I.e. your tax free amount. Any other income you draw will be in the form of dividends on which you will pay a lower rate of tax and no NI contributions.

 

[IQ Electrical]

Just an important point that doesn't seem to have been mentioned here-you can offset CIS payment deductions on your limited company invoices against any PAYE (Pay As You Earn) and Class 1 NICs that you pay to yourself or other employees.
If you do this as part of a monthly payroll it can be very beneficial to cashflow!

 

[ARK]

if a contractor doesnt give you the remmitance advise with deductions on tell them its a £3000 instant fine if they are not provided within 30 days, it seems to jog them on,

get an accountant there is ways you can take tax free money for your first year, you need to log all your assets tools etc and stick them into the company as a directors loan and take the money that way

 

[DJ Ovengloves]

WTF does this mean? (*first part)

if a contractor doesnt give you the remmitance advise with deductions on tell them its a £3000 instant fine if they are not provided within 30 days, it seems to jog them on,

get an accountant there is ways you can take tax free money for your first year, you need to log all your assets tools etc and stick them into the company as a directors loan and take the money that way

 

[ARK]

it means if someone pays you and deducts from source they are legally responsible to send you a statement of deductions, if they dont do this within 30 days it is a instant £3000 fine

 

[DJ Ovengloves]

But was does the word contractor have to do with it in your first post. If you have contracted someone, assuming the contract is outside IR35 they wouldn't be an employee and therefore they would simply submit an invoice (and VAT if appropriate)?

Not having a pop, just trying to get my head around this

 

[ARK]

But was does the word contractor have to do with it in your first post. If you have contracted someone, assuming the contract is outside IR35 they wouldn't be an employee and therefore they would simply submit an invoice (and VAT if appropriate)?

Not having a pop, just trying to get my head around this

Contractor due to te discussion about Cis, they must be a contractor to deduct