PSC Limited Company advice.

[internetpseudonym]

Hi,
I am a contractor and have decided to set myself up as a so-called PSC, which is to say a Ltd company, on my own. I'm looking here for advice on how to use this to my best (tax) advantage and for info that I havn't been able to find elsewhere, and hopefully others finding this will have their questions answered in the process.

My contract work currently takes two distinct forms - work that is calculated hourly and paid as PAYE within IR35, and work for which I invoice as a lump sum for a designated project. Both are presently processed though an umbrella and it is the latter I am particularly keen to maximise my tax advantages on.

So far, the only information in plain english I can find is either outdated, or BS from Umbrellas, set-up services and other people trying to make a buck. So hopefully others can benefit from any clear answers to my questions. Which are:

1. The lump sum monies. Is there any advantage (or disadvantage) to my invoicing for these sums divided up as a daily rate, or should I continue to invoice for them as a single figure. The tax distinction isn't clear to me.

2. My main confusion is with turning the money in the business account into money payed to me, while maximising the end sum.

For IR35 work, I would be invoicing the employment agency ( I rarely work for end client directly) who I understand would deduct both employers and employees deductions before the money reaches my account, paying me the NET?
Would I then have to incur repeat deductions on my drawings to myself?
Or by removing the intermediary (Umbrella) would I be receiving the gross earnings and making my own deductions to be paid at end of account year?
In short, in the transfer of IR35 payments from Client/Agency to Business Account to Personal Account, where is the tax being deducted and at what stage?

3. If much of my money is coming to me in lump sums, i gather the most advantageous way to receive that, is to pay it to myself as a regular low-tier wage? But in such an instance would I not be incurring employers and employees deductions again and Corporation Tax, negating the advantages? Any and all advice welcome.

[pmeswani]

Hi,
I am a contractor and have decided to set myself up as a so-called PSC, which is to say a Ltd company, on my own. I'm looking here for advice on how to use this to my best (tax) advantage and for info that I havn't been able to find elsewhere, and hopefully others finding this will have their questions answered in the process.

My contract work currently takes two distinct forms - work that is calculated hourly and paid as PAYE within IR35, and work for which I invoice as a lump sum for a designated project. Both are presently processed though an umbrella and it is the latter I am particularly keen to maximise my tax advantages on.

So far, the only information in plain english I can find is either outdated, or BS from Umbrellas, set-up services and other people trying to make a buck. So hopefully others can benefit from any clear answers to my questions. Which are:

1. The lump sum monies. Is there any advantage (or disadvantage) to my invoicing for these sums divided up as a daily rate, or should I continue to invoice for them as a single figure. The tax distinction isn't clear to me.

2. My main confusion is with turning the money in the business account into money payed to me, while maximising the end sum.

For IR35 work, I would be invoicing the employment agency ( I rarely work for end client directly) who I understand would deduct both employers and employees deductions before the money reaches my account, paying me the NET?
Would I then have to incur repeat deductions on my drawings to myself?
Or by removing the intermediary (Umbrella) would I be receiving the gross earnings and making my own deductions to be paid at end of account year?
In short, in the transfer of IR35 payments from Client/Agency to Business Account to Personal Account, where is the tax being deducted and at what stage?

3. If much of my money is coming to me in lump sums, i gather the most advantageous way to receive that, is to pay it to myself as a regular low-tier wage? But in such an instance would I not be incurring employers and employees deductions again and Corporation Tax, negating the advantages? Any and all advice welcome.

Firstly, you have just posted something that will attract a lot of fun comments from other posters. I would suggest reading the First Timers guide on this site. I would then try and understand various tax rules. I would then suggest speaking to an Accountant who can explain things to you. I will give you a clue... the agency doesn't take any National Insurance or Income Tax from your daily rate. Either the Umbrella or your Ltd company will. Unless you are applying for Agency Temp roles and not Contractor roles, you are (via your Ltd Company or Umbrella) responsible for ALL tax liabilities (except for the Umbrella Corp. Tax and any other business rates that apply to them).

I don't think you know enough about the Contractor market to seriously start up your own Limited company.

[internetpseudonym]

If I sound like an idiot, it was deliberate. Since a lot of the more advanced information is easy to come by but the most basic is overlooked and assumed to be obvious. Its this assumption that renders the entire HMRC site gibberish to most people.

I actually found that very helpful, as will many other (idiots like me) joining the exodus from Umbrella to PSC. The whole reason that the many Umbrellas and Set Up services that haunt this site exist, is to exploit our historic belligerence to our own finances.

I did not previously realise that my company would be receiving all forms of payment as Gross - and now I do. And this simple clarification has cleared up the rest of it for me. So thank you. But at the same time, why on earth would I talk to a real-world accountant with that little preparation, when I can ask the basics first on an internet forum? Think about it.

[BrowneIssue]

PSC

I wish you'd stop using that term unless you know what it means. If so, do tell us.

[internetpseudonym]

I wish you'd stop using that term unless you know what it means. If so, do tell us.

See, now I thought I was asking the questions and you were meant to be telling me. If you go back to the first sentence in my first post, you'll see that I was reluctant to bandy about this 'PSC' thing since I don't understand it to be a genuine legal term. However, it does seem to have been adopted as the catch-all term for individuals setting up Ltd companies after the 2008 ammendements. It's certainly the term that keeps coming up, when you try to google for basic information and the only stuff to be found is from companies trying to deliberately obfuscate so you'll pay them to set up the basics. So if it's not a real term and something us joe shmoes shouldn't be saying, do tell us.

Anyway, none of this is helping answer my main question, which I still cant find a straight answer to elsewhere:
Much of my work is through employment agencies and is presently processed by an Umbrella. They duly estimate this work to be inside of IR35 and deduct accordingly, paying me the NET.
With my own company, does the nature of the agency work, place me under any obligation to pay myself the full amount received, or indeed any of it?
That is, does where the money came from have any baring on IR35, or does that only come into play once I deduct my own salary from my own business?

[ASB]

I did not previously realise that my company would be receiving all forms of payment as Gross - and now I do.

That may well be true, and for most on here will be. However if you are, say, a jobbing chippy, then it may well turn out no to be true due to a thing called the CIS.

[pmeswani]

I wish you'd stop using that term unless you know what it means. If so, do tell us.

I'm guessing (s)he's a sockpupet. I can't work out whose sockpupet he belongs to... but I am sure the OP is a sockpupet.

[internetpseudonym]

You guys are a world of charity.

So, say I'm employed through a recruitment agency to go work for a client, in a capacity that would be considered inside of IR35 ruling. The recruitment agency then pays gross into my business account. right?
Now (and this is the question) is the business (employer) legally obliged to pay me (employee) the full amount determined in the contract with the agency/client?
Or is it to my discretion to pay (myself) as much or as little of it as I like, provided said amount is accompanied by the appropriate deductions - thereby reducing employee deductions (and pay) but not employer?

That seems a fair enough question. And I officially don't care if I sound like an noob, so knock yourselves out.

[cojak]

But at the same time, why on earth would I talk to a real-world accountant with that little preparation, when I can ask the basics first on an internet forum? Think about it.

Because we aren't accountants and could tell you any kind of tulipe for the sport?

Just a thought...

[RichardCranium]

I smell blood.

Hi,
I am a contractor and have decided to set myself up as a so-called PSC, which is to say a Ltd company, on my own.

Well done. Go on then.

You've made a decision. No doubt having done lots of research.

Off you go.

I'm looking here for advice

Are you still here?

for info that I havn't been able to find elsewhere

Try looking. On the right, for example.

My contract work currently takes two distinct forms

So you've been at this game for a while. Good. Then you ought to know what you're doing.

work that is calculated hourly and paid as PAYE within IR35, and work for which I invoice as a lump sum for a designated project. Both are presently processed though an umbrella and it is the latter I am particularly keen to maximise my tax advantages on.

Possibly the wrong way round, but hey ho.

So far, the only information in plain english I can find is either outdated, or BS from Umbrellas, set-up services and other people trying to make a buck.

Google?

1. The lump sum monies.

That's nice.

2. My main confusion is with turning the money in the business account into money payed to me, while maximising the end sum.

You're a funny contractor. Even your brolly can explain that.

For IR35 work, I would be invoicing the employment agency ( I rarely work for end client directly) who I understand would deduct both employers and employees deductions before the money reaches my account, paying me the NET?

Has it never, ever occurred to you to check that what they are paying you is right? Are you really taking their word for it? For real? Really? Did you never, ever think to wonder if it was right? Did you never consider to work out what your take home might be BEFORE you went contracting? Are you a complete idiot? Or do you have bits missing?

Would I then have to incur repeat deductions on my drawings to myself?

Don't make stuff up just to confuse yourself. You've got it bad enough already.

where is the tax being deducted and at what stage?

No wonder the MPs know they can squander tax money.

3. If much of my money is coming to me in lump sums, i gather the most advantageous way to receive that, is to pay it to myself as a regular low-tier wage? But in such an instance would I not be incurring employers and employees deductions again and Corporation Tax, negating the advantages? Any and all advice welcome.

You MUST surely know what you are talking about and just trying to wind us up. You do know, don't you? Who are you? Troll?

If I sound like an idiot, it was deliberate.

That much is now clear.

I actually found that very helpful, as will many other (idiots like me) joining the exodus from Umbrella to PSC.

References, please? Quote your source for that piece of information.

The whole reason that the many Umbrellas and Set Up services that haunt this site exist, is to exploit our historic belligerence to our own finances.

you're a regular then. So you will have seen your questions answered already. You're a troll.

I did not previously realise that my company would be receiving all forms of payment as Gross - and now I do.

WTF did you think contracting was? Did you think you were a temp? Or self-employed? Or what? Have you just been turning up at work places and accepting whatever money you get given? Are you wet behind the ears or retarded?

why on earth would I talk to a real-world accountant with that little preparation, when I can ask the basics first on an internet forum? Think about it.

Errm. What do you think accountants are for? Professional advice, not random stuff from strangers. Just how gullible are you? (No, gullible isn't in the dictionary, so don't bother looking it up.)

If you go back to the first sentence in my first post, you'll see that I was reluctant to bandy about this 'PSC' thing since I don't understand it to be a genuine legal term.

Well, if you did, you forgot to write it. Out here outside your fantasy world, anyway.

Anyway, none of this is helping answer my main question, which I still cant find a straight answer to elsewhere:

Try a straight question.

Much of my work is through employment agencies and is presently processed by an Umbrella. They duly estimate this work to be inside of IR35 and deduct accordingly, paying me the NET.
With my own company, does the nature of the agency work, place me under any obligation to pay myself the full amount received, or indeed any of it?
That is, does where the money came from have any baring on IR35, or does that only come into play once I deduct my own salary from my own business?

But you have already said you don't have a Limited Company? Are you not paying yourself now? What do you want to do, save it up?

You guys are a world of charity.

This was the point my patience evaporated.

Now (and this is the question) is the business (employer) legally obliged to pay me (employee) the full amount determined in the contract with the agency/client?

No, you can stick it up yer arse if you like. Yet strangely, this will count as a withdrawal, not an investment.

HTH.

And I officially don't care if I sound like an noob

Don't you worry yourself on that point! You're clearly a regular that's trolling. And the annoying bit is, it worked.