Accountant Problems

[prozak]

Firstly, no NIC (either employees or employers) would be due on an annual salary of £7000 - the National Insurance bands are per 'employment' not per person. So you could have five jobs, each paying a salary of £7000, giving a total income of £35,000 and you would not pay any NIC.

snip blah blah CT stuff...
Alan

So I could have 10 jobs - and earn 70k without paying NI?

What about if I leave one and hand the other my P45 (as kitty would be doing?)

[northernladuk]

So I could have 10 jobs - and earn 70k without paying NI?

What about if I leave one and hand the other my P45 (as kitty would be doing?)

I take it this is hypothetical as a permie and not realistic to the contracting via LTD setup.

[Clare@InTouch]

So I could have 10 jobs - and earn 70k without paying NI?

What about if I leave one and hand the other my P45 (as kitty would be doing?)

NI isn't on a P45, that form shows the previous pay and tax only. So yes, effectively you could.

[prozak]

NI isn't on a P45, that form shows the previous pay and tax only. So yes, effectively you could.

Right. Interesting. Didn't realise that one.

Not that it is relevent to me, purely hypothetical.

Thanks.

Just thinking about this.... I've never delved into the related companies type stuff as it is also not relevent to me.... What stops me from having 3 limited companies each earning some revenue from different contracts for the year and taking a 7k salary from each?.. I assume HMRC will just say that this is an artificial structure to avoid NI if they are all the same contracting type business? But can't do much about it if they all get revenue from different business models - i.e ONe Contractor Company, One selling fish etc etc.

[Danielsjdaccountancy]

Right. Interesting. Didn't realise that one.

Not that it is relevent to me, purely hypothetical.

Thanks.

Just thinking about this.... I've never delved into the related companies type stuff as it is also not relevent to me.... What stops me from having 3 limited companies each earning some revenue from different contracts for the year and taking a 7k salary from each?.. I assume HMRC will just say that this is an artificial structure to avoid NI if they are all the same contracting type business? But can't do much about it if they all get revenue from different business models - i.e ONe Contractor Company, One selling fish etc etc.

Self-assessment is in on your worldwide income so you only get 1 personal allowance, therefore not possible.

[Clare@InTouch]

Right. Interesting. Didn't realise that one.

Not that it is relevent to me, purely hypothetical.

Thanks.

Just thinking about this.... I've never delved into the related companies type stuff as it is also not relevent to me.... What stops me from having 3 limited companies each earning some revenue from different contracts for the year and taking a 7k salary from each?.. I assume HMRC will just say that this is an artificial structure to avoid NI if they are all the same contracting type business? But can't do much about it if they all get revenue from different business models - i.e ONe Contractor Company, One selling fish etc etc.

By that logic paying dividends could be seen as avoiding NI. If you're a director and being paid a notional salary from each company to recompense you for your director duties, then I don't see a problem.

You may have problems with related/associated company rules for CT and VAT though (depending on business type and ownership).

[prozak]

Self-assessment is in on your worldwide income so you only get 1 personal allowance, therefore not possible.

Daniel.. just in reference to NI...

[prozak]

By that logic paying dividends could be seen as avoiding NI. If you're a director and being paid a notional salary from each company to recompense you for your director duties, then I don't see a problem.

You may have problems with related/associated company rules for CT and VAT though (depending on business type and ownership).

interesting.

though with CT at 20% now the benefit of doing this seems negligible as anything over 7475 is going to be taxed anyhow.

So I guess the benefit is about £80.... i.e. the corp tax you wouldn't pay on the additional personal allowance of £400 - odd that is not currently being paid to avoid NI.

[TheFaQQer]

Right. Interesting. Didn't realise that one.

Not that it is relevent to me, purely hypothetical.

Thanks.

Just thinking about this.... I've never delved into the related companies type stuff as it is also not relevent to me.... What stops me from having 3 limited companies each earning some revenue from different contracts for the year and taking a 7k salary from each?.. I assume HMRC will just say that this is an artificial structure to avoid NI if they are all the same contracting type business? But can't do much about it if they all get revenue from different business models - i.e ONe Contractor Company, One selling fish etc etc.

I'd take it that if they were significantly different revenue streams, then you could do it and get your £7k from each one without paying NI.

If they were too similar, then the Ramsay principle would apply.

[ASB]

So I could have 10 jobs - and earn 70k without paying NI?

What about if I leave one and hand the other my P45 (as kitty would be doing?)

Yes. (provided they are not associated in which case the pay is cumulated for NI purposes).

HM Revenue & Customs: Employee has more than one job

Conversely you could have 3 jobs each paying 50k and pay considerably more than you would with one job paying 150k. (This case is resolvable by applying to NICO for deferment since the upper earnings limit is actually across all employments and defined by statute. It can be awkward to resolve, but you generally get there in the end. Don't expect NICO to be writing to you saying "hey you've overpaid...")