Advice on returning to permanent employment

[SierraPapaCharlie]

Hi all,

This is my first post on here - I wish I'd found this forum a long time ago!

So, my question is this; I am contemplating returning to permanent employment (PE) for a number of reasons which I won't bore you all with, and having never found myself in this situation before, I wanted to understand the options for doing this is in the most tax efficient manner possible. My current contract ends July 2017, and the role I am looking at would start 01/08/2017, and I have some specific questions as follows;

1. If I do decide to return to PE, with respect to my own personal tax liability, what are the pros/cons of closing the company within the personal tax year (ie; stop contract end of April, and close company before tax year end), vs continuing on until the end of my contract in July - if any?

2. For my own personal tax liability, when returning to PE, is it possible to instruct HMRC to have my personal tax bill paid via PAYE with a different tax code, or I am still required to complete a self assessment and pay my personal liability before Jan 31 2018?

I guess ultimately what I am trying to avoid is any large/unforseen tax bills come Xmas/Jan this year, because I wasn't savvy when transitioning back to PE.

Apologies if this is covered elsewhere - I did search but found lots of articles for people coming from PE to contract, but not so many going back the other way - either that or my search skills are just rubbish!

Any help, guidance or links to good articles that cover this would be greatly appreciated.

Many thanks in advance for your advice...

Mark

[VectraMan]

Has you asked NLUK to tell you to ask your accountant?

1. Are you wanting a couple of months off? Otherwise I don't know why you'd throw away that income.

2. Maybe. There's a form you can fill out to inform them your likely earnings for the year. There's a chance your tax code will end up a mess, but it'll all be sorted out with a future SA.

If you're sure you're doing it, I would stop paying a salary from the end of this tax year leaving the allowance for the permie job.

[northernladuk]

Has you asked NLUK to tell you to ask your accountant?
.

Oh yes.. Very clever. You know it's the best advice but are too chicken to give it. Lol Use NLUK as a front to not get the grief... Where is your backbone man!!

[Maslins]

This really is one to run by your accountant. One significant thing you make no mention of is what (if any) war chest you've got in the company. It can be a perk of closing that you can often get this out taxed on you as capital gains, typically benefiting from entrepreneurs relief meaning <10% effective tax rate. Where your choice is this or 32.5% higher rate tax on dividends it can be appealing, though there is the third option of a hefty pension contribution.

If you have negligible war chest there's not much to suggest really.

I don't think tax should be a consideration in terms of whether to stop this tax year or 3 months later. Also I wouldn't recommend trying to get personal tax collected via your tax code. It may sound good in theory, but in practice it virtually always ends in a big mess.

[LondonManc]

Definitely one for your accountant; it also very much depends on your salary in the PE as you'll then be looking at a trade off between dividends and entrepreneurs relief.

[northernladuk]

You all make me feel so proud.

[RonBW]

1. If I do decide to return to PE, with respect to my own personal tax liability, what are the pros/cons of closing the company within the personal tax year (ie; stop contract end of April, and close company before tax year end), vs continuing on until the end of my contract in July - if any?

If the company has more than £25k in assets then you are going to need to do an MVL, which isn't going to happen this tax year.

If the company has less than £25k in assets then you don't need to do an MVL but you will need to do lots of other accounting filings (deregister for VAT, deregister for PAYE, final accounts etc), which is unlikely to happen this tax year.

I'd keep working, maximise the income to the company and then work out the best way to get as much of that in your pocket as possible at your leisure after August.

[billybiro]

You all make me feel so proud.

What does your accountant think of your pride?

[northernladuk]

What does your accountant think of your pride?

Erm. Right..good one.

[Lance]

If the company has more than £25k in assets then you are going to need to do an MVL, which isn't going to happen this tax year.

Note. This is not a NEED. There are many options of which MVL is one.