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IR35 paying out salary at end of year

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    IR35 paying out salary at end of year

    Is it true that if you are working inside IR35, you basically need to empty out the company bank account not once but twice a year?

    Firstly before tax year end, because the deemed payment calculation is a personal one so you will end up paying tax+NIC on the income to that date, and then again when you actually pay it out;

    Secondly before company year end, because if you have any money left then it will be profit and due for CT, but that won't affect the next deemed payment calculation so you will pay tax+NIC on it as well.



    I know:
    "why are you paying a voluntary tax?"
    "what does your accountant say?"
    "do you know how to use the search function?"
    "are you sure you're cut out for contracting?"
    (don't want the hassle, I'm about to ask, yes, and no but I haven't found anything better)
    Last edited by expat; 18 March 2014, 12:46.

    #2
    Jesus wept!
    Last edited by northernladuk; 18 March 2014, 13:03.
    'CUK forum personality of 2011 - Winner - Yes really!!!!

    Comment


      #3
      Originally posted by northernladuk View Post
      Jesus wept!
      Shorthand for 3 of the 4 caveats?

      Comment


        #4
        Not true at all.

        For example you could calculate the salary at the end of the year and not actually pay it out.

        Comment


          #5
          Originally posted by Craig at Nixon Williams View Post
          Not true at all.

          For example you could calculate the salary at the end of the year and not actually pay it out.
          Come, you were tempted to say something else weren't you hey... come on, admit it.
          'CUK forum personality of 2011 - Winner - Yes really!!!!

          Comment


            #6
            Can we not just reply with this smilie from now on?

            Comment


              #7
              Originally posted by Craig at Nixon Williams View Post
              Not true at all.

              For example you could calculate the salary at the end of the year and not actually pay it out.
              Ah. Good point. So it is not literally necessary to empty the bank account, but the point is the same, calculate salary (and pay tax).

              Coming up to company year end, is it possible to calculate future salaries? Does that reduce profit in this year?

              Comment


                #8
                Originally posted by northernladuk View Post
                Come, you were tempted to say something else weren't you hey... come on, admit it.
                FAO Mods: this guy is being rude to me, how rude am I allowed to be to him?

                Comment


                  #9
                  Originally posted by expat View Post
                  Coming up to company year end, is it possible to calculate future salaries? Does that reduce profit in this year?
                  Expenses generally reduce the profit in the year in which they are incurred (on an accrual basis).

                  Comment


                    #10
                    Originally posted by TheCyclingProgrammer View Post
                    Can we not just reply with this smilie from now on?

                    'CUK forum personality of 2011 - Winner - Yes really!!!!

                    Comment

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