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Limited Company Contractor to PAYE

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    Limited Company Contractor to PAYE

    Hi all,

    Apologies if this has been asked before but I couldn't find a related thread.

    For tax year 19-20 I worked both as a limited company contractor and PAYE contractor and wanted to understand how to complete my self assessment.

    From Apr 19 to Sep 19 I paid myself a small monthly self-salary and a dividend. From Dec 19 onwards I was paid via PAYE via the company I work for now.

    I'm unsure how to complete my self assessment in regards to the self-salary and dividend. Since I am PAYE now, would any part of the self-salary already have been taxed? And would I still be able to use the personal allowance or would this have already been used part of the PAYE salary?

    Also, I haven't done anything with regards to the HMRC PAYE tool. Would I need to submit the final submission and then leave there as an employee of my limited company.

    I've kept my limited company open for now in case I return to it so it's basically sitting dormant from Sep 19 and I will need to do a corporation tax return as well. I am planning on withdrawing a dividend for the current tax year at some point.

    If you are able to provide any advice or guidance that would be much appreciated.

    Many thanks in advance
    Michael

    #2
    It's not dormant. It's sitting unused. Dormant is a whole different catagory that has a whole different set of rules and process.
    'CUK forum personality of 2011 - Winner - Yes really!!!!

    Comment


      #3
      Ask your accountant. Or maybe even get one?
      The greatest trick the devil ever pulled was convincing the world that he didn't exist

      Comment


        #4
        you'll get a P60 for the tax year from your employee. You'll also get from your company's accountant.
        The two of those will need to be entered into the SATR portal, if it doesn't have them already from RTI.
        And you input your dividends drawn into that section.

        Why don't you start filling in that form and come here to ask specific questions when you have them?

        Also, if you don't have an accountant, get one. Not for the SATR as that's easy. But if you don't know where to start with SATR I doubt you'll be able to do the CT without ballsing it up massively.
        See You Next Tuesday

        Comment


          #5
          Originally posted by LondonManc View Post
          Ask your accountant. Or maybe even get one?
          Seriously this.

          I wouldn’t even begin to complete a self assessment in your situation.

          Why draw attention to yourself if you make a mistake?

          Comment


            #6
            Originally posted by captainmichael View Post
            Hi all,

            Apologies if this has been asked before but I couldn't find a related thread.

            For tax year 19-20 I worked both as a limited company contractor and PAYE contractor and wanted to understand how to complete my self assessment.

            From Apr 19 to Sep 19 I paid myself a small monthly self-salary and a dividend. From Dec 19 onwards I was paid via PAYE via the company I work for now.

            I'm unsure how to complete my self assessment in regards to the self-salary and dividend. Since I am PAYE now, would any part of the self-salary already have been taxed? And would I still be able to use the personal allowance or would this have already been used part of the PAYE salary?

            Also, I haven't done anything with regards to the HMRC PAYE tool. Would I need to submit the final submission and then leave there as an employee of my limited company.

            I've kept my limited company open for now in case I return to it so it's basically sitting dormant from Sep 19 and I will need to do a corporation tax return as well. I am planning on withdrawing a dividend for the current tax year at some point.

            If you are able to provide any advice or guidance that would be much appreciated.

            Many thanks in advance
            Michael
            Hi Michael,

            To answer your question in a very basic form, you effectively state all your income (both salaries from being a PAYE contractor and limited company contractor, dividends, bank interest etc). Your personal tax is then calculated by deducting your personal allowance from your gross income and any tax paid at source (income tax taken from your small monthly self salary and PAYE contracting job) to leave either a balancing tax payment due by 31 Jan 2021 or a refund if you've paid too much during the tax year 19-20.

            As others have asked, do you have an accountant? There are so many unanswered questions and pitfalls that you may be now subjected to (one being that it appears you may not have submitted any RTI's or final EPS for the last tax year). Based on your questions, I think you need to either do some more research into running a company and drawing up your accounts, corporation tax return and personal tax return or look to hire an accountant to save you time, money and future comebacks. If you plan on drawing dividends in the current tax year, are you aware of the tax rates, dividend allowance and tax implications of taking a dividend on top of your current level of salary?

            We're not saying it's impossible to do all these yourself and indeed many people here do or have in the past but it does sound like you need more guidance, advice and research.

            Comment


              #7
              Originally posted by Craig@Clarity View Post
              Hi Michael,

              To answer your question in a very basic form, you effectively state all your income (both salaries from being a PAYE contractor and limited company contractor, dividends, bank interest etc). Your personal tax is then calculated by deducting your personal allowance from your gross income and any tax paid at source (income tax taken from your small monthly self salary and PAYE contracting job) to leave either a balancing tax payment due by 31 Jan 2021 or a refund if you've paid too much during the tax year 19-20.

              As others have asked, do you have an accountant? There are so many unanswered questions and pitfalls that you may be now subjected to (one being that it appears you may not have submitted any RTI's or final EPS for the last tax year). Based on your questions, I think you need to either do some more research into running a company and drawing up your accounts, corporation tax return and personal tax return or look to hire an accountant to save you time, money and future comebacks. If you plan on drawing dividends in the current tax year, are you aware of the tax rates, dividend allowance and tax implications of taking a dividend on top of your current level of salary?

              We're not saying it's impossible to do all these yourself and indeed many people here do or have in the past but it does sound like you need more guidance, advice and research.
              Thanks for this, it is very useful. I have now submitted my final EPS return and as I draw a small salary there is no tax that needs to be paid on this.

              I no longer plan to withdraw a dividend for this year as I believe I will be paying tax at the higher tax rate which I want to avoid. I will look into my options but from reading other threads MVL might be the most likely option.

              The way I have worked out my current self assessment tax (on excel for now) is:
              - Income - salary from Limited Company + salary from PAYE + bank interest + dividend
              - Less allowances - PA split between Limited company and PAYE + savings allowance + dividend allowance (2k)
              - Tax calc - use Income Tax rates for salaries, which takes me to basic rate + use remainder of basic rate on dividend and tax the rest of the dividend at higher rate
              - Less tax already paid through PAYE (which I believe covers salary only and not dividend)
              - Final tax number

              The above is what I wasn't sure about but unless I am missing anything fundamental I am more comfortable now.

              I've completed a corporation tax return before and not went through an accountant so I should be ok doing that. The only thing that was new to me was effectively having two salaries from two sources while a 'large' dividend was withdrawn like I was only a Limited Co contractor. Which ultimately means I just need to pay more tax on that part.

              Comment


                #8
                Originally posted by captainmichael View Post
                Thanks for this, it is very useful. I have now submitted my final EPS return and as I draw a small salary there is no tax that needs to be paid on this.

                I no longer plan to withdraw a dividend for this year as I believe I will be paying tax at the higher tax rate which I want to avoid. I will look into my options but from reading other threads MVL might be the most likely option.

                The way I have worked out my current self assessment tax (on excel for now) is:
                - Income - salary from Limited Company + salary from PAYE + bank interest + dividend
                - Less allowances - PA split between Limited company and PAYE + savings allowance + dividend allowance (2k)
                - Tax calc - use Income Tax rates for salaries, which takes me to basic rate + use remainder of basic rate on dividend and tax the rest of the dividend at higher rate
                - Less tax already paid through PAYE (which I believe covers salary only and not dividend)
                - Final tax number

                The above is what I wasn't sure about but unless I am missing anything fundamental I am more comfortable now.

                I've completed a corporation tax return before and not went through an accountant so I should be ok doing that. The only thing that was new to me was effectively having two salaries from two sources while a 'large' dividend was withdrawn like I was only a Limited Co contractor. Which ultimately means I just need to pay more tax on that part.
                If you fill all your income details and tax deducted at source into HMRC's tax return online, it'll work out the tax due and provide you with a tax calculation which you can check against.

                Comment

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