IR35 Deemed payment & investments

[Whoknows]

If you're inside IR35, but instead of paying yourself any money your Ltd company invested the funds in to shares in another company......how does that sit with the deemed payment calculation? Does that break the rules....i.e. are you forced into paying out the salary when inside IR35?

I know pension payments come out before the calculation, along with other allowable expenses.

[VectraMan]

Good luck with that. I don't think that would be an allowable expense.

[Louisa@InTouch]

Agreed, this would not be an allowable deduction for the deemed salary calculation.

So, you would still have to calculate the deemed salary based on the receipts in the tax year.

[Whoknows]

My understanding is the same - if it isn't an allowable expense then it must be paid through the deemed payment calc as salary (with all the associated taxes). I have been told otherwise by someone else, so just wanted to clarify. Thanks!

[Jessica@WhiteFieldTax]

Apart from very limited exceptions - in fact so limited I can't think of any - there are no tax reliefs in investing on shares via a company anyway. There are some listed CT reliefs on gains on disposal, eg SSE.

Therefore inside IR35 or out, these investments are made from retained profits after deemed salary and CT.

Of course you don't have to draw all the deemed salary, you can leave an element on loan account for funding capital activities, eg investment via the company, although you may want to talk to your accountant about whether investing in a personal name may be more sensible.

Hth