On Tue, 20 Mar 2001, you wrote:
> All this is pre-ir35:
> > as a employee of a limited company you would be paid national minimum
> > wage (4 quid an hour) .. you pay NIC and tax on that ... (minimal) .. you
> > claim expenses off the (ie your own) company for all the driving around
> > you do and having to buy things and accomodation whilst away from home etc
> > ... and whats left in the company coffers is profit. This has advance
> > corporation tax paid at 20% and ends up in the pockets of the
> > shareholders as tax free income upto 30K each a year
> Rubbish ;) its NIC free, not tax free.
true, technically its not tax free .. as the company has paid 20% on
it which is only 2% less (or is it 3%) less than basic rate. the big
saving is if you are able to split it across 2 shareholders eg you and
your wife, thus avoiding the 40% thing. for reasons less than clear to me
this money is treated as being +10% gross (ie for every 1000 pounds you
get it counts as 1100 pounds of tax-paid income .. but hey, thats what I
pay the accountant for, to understand this sort of nonsense.
> > .. and if the share
> > holders happen to be say, you and your wife then thats a cute way of
> > getting 70K from a contract into your pockets and only paying ~ 15% tax
> > overall on it ... now do you see why they introduced IR35 as a way of
> > trying to stop it .. ;)))
> No, thats what the self-assessment form is for at the end of the year.
so long as you have paid your NIC and PAYE throughout the year and kept a
careful eye on how much the divvies come to then there should be little
else to pay ... 80~85% in your pocket is quite achievable... this is of
course when you suddenly reallise that youve been giving out divvies far
too frequently and you had an effective income of 60K each .. and that
you;ve already spent it all and owe the taxman $LOTS. ;)
the other big advantage of a limited company is that it allows you to
decide when to release the money .. as a sole trader if you earn shed
loads one year it all counts as income for that year .. with a limited
company you might decide that the dividend would not be paid until say ..
the end of April, thus it would count towards your income for next year
and avoid the 40% thing .. which if you take a lot of holidays or find it
difficult to get a contract could be advantageous to be able to do that
sort of thing from time to time.
The box said "requires windows 95 or better"
So I installed Linux!