FTC PAYE using BR tax code to save hassle making LTD dormant...

**MEMEME69** · 25 June 2018, 07:04

Anyone...

Also,..

I'm supposed to start my FTC tomorrow - last Tuesday of June.
Can I draw my usual minimal salary (below tax & NI threshold) out of my Ltd which I usually do the last working day of the month - early today, using my 1185L tax code.
In July I will ensure my FTC employer has me nominated as my main job with 1185L tax code and in my Ltd I will be changed to a basic rate code.

As the first FTC payroll will include 4 days from June - will this cause any potential issues / requirement to pay back tax on my Ltd salary paid using the 1185L tax code at full whack?

Thanks.

**malvolio** · 25 June 2018, 07:11

An FTC is not a contract. You will be on the client's payroll with a set end-date and treated as a permie, albeit with a few limitations on things like redundancy and pensions. YourCo will not be involved, and you will be paid net into your personal bank account. Depending on your own needs, you may not have to take a salary from YourCo for the duration.

So if it's only a short term gig, leave YourCo slumbering in the corner until you get a proper contract again. Your tax position will be corrected next April when you complete your SAR of course.

**Cirrus** · 25 June 2018, 08:55

I did an FTC once. Didn't do anything special to my company. Didn't feel the need to inform HMRC.

**Maslins** · 25 June 2018, 09:40

If it's short term with you expecting to return to contracting afterwards, I'd likely suggest you leave the payroll of Yourco but otherwise leave it ticking along. No practical harm in you staying on the payroll...but does mean you'd need to tell the new employer that you have another job which they might not be best pleased about. Ie it's more a courtesy/trying to avoid confusion/"computer says no" rather than a tax reason.

I regularly hear contractors talking about making their company dormant. Seems there's real misinformation about this. You can't just pause your company for brief periods when you're not using it. You either keep it fully ticking over (ie still doing payroll, VAT, annual submissions as normal, even if turnover lower) or you stop it completely. You don't necessarily need to close the company, but making it dormant means de-registering for most taxes, tidying up lots of bits and bobs, then ensuring the company incurs literally no transactions for at least a whole year. If you're going to get to that position, may as well close fully.

**fidot** · 25 June 2018, 09:50

Once you have had your first payslip from your new employer, you can phone HMRC up and apportion your tax code across the 2 jobs in whatever amount you want.

They will ask a few questions about expected income from each of the employers and then send new tax notices to them both.

**fidot** · 25 June 2018, 10:02

Originally posted by MEMEME69 View Post

In July I will ensure my FTC employer has me nominated as my main job with 1185L tax code and in my Ltd I will be changed to a basic rate code. .

My experience was that this couldn't be done until the new employer has made a return showing that you are on the payroll.

**JB3000** · 25 June 2018, 21:44

Originally posted by Maslins View Post

I regularly hear contractors talking about making their company dormant. Seems there's real misinformation about this. You can't just pause your company for brief periods when you're not using it. You either keep it fully ticking over (ie still doing payroll, VAT, annual submissions as normal, even if turnover lower) or you stop it completely. You don't necessarily need to close the company, but making it dormant means de-registering for most taxes, tidying up lots of bits and bobs, then ensuring the company incurs literally no transactions for at least a whole year. If you're going to get to that position, may as well close fully.

+1

Yup, according to this you can't have any transactions other than the essentials: https://www.gov.uk/dormant-company/d...ompanies-house

You would literally have to close your company bank account to avoid bank charges and find an accountant to work for free to avoid accountancy fees.

This is probably the most recurring error spouted into this forum. That, and thinking a director is automatically entitled to dividends by virtue of being a director.

**JB3000** · 25 June 2018, 21:49

Originally posted by MEMEME69 View Post

Hi Guys,

In order to avoid the hassle, requirements & delay in making my Ltd dormant.

What would you guys recommend?

Thanks,

Mark

How are you going to make your company dormant exactly?

Close the bank account to stop the bank charges?

Find an accountant to work for free to stop the accountancy fees?

Submit dormant accounts for what period?

Speak to your accountant ASAP.

**Hobosapien** · 26 June 2018, 08:11

I have a ltd that is currently dormant, was using it for non-vat registered public services as a failed plan B. Not got round to closing it as in the accounts it owes my other Ltd (the vat registered one I've been contracting through until recently) a few grand. My accountant sorts out the year end dormant accounts for filing and I pay the fees personally (as sole shareholder and therefore owner of the dormant company) so no need for company bank account.

If you don't use the Ltd it will become as good as dormant anyway due to lack of activity, so you can sort out the official status when filing the annual accounts and in the meantime see what happens regarding work.

You may not even need to close the bank account if you can ensure no trading activity is recorded for the period you intend it to become dormant. Bank charges shouldn't count as trading, though that may not fit HMRC's idea of logic so would need looking into. You could see if the bank will accept the charges up front as an annual fee so can stop all activity if necessary then close before next annual fee is due if decide to go dormant officially while deciding whether to close it completely.

FTC PAYE using BR tax code to save hassle making LTD dormant...