How would I keep tax simple for a ltd company?

[Austin Wong]

Here is something I am wondering.

I am quite cautious about tax so I thought of an alternative to safeguard myself a bit to be on the right side of the ledger.

Say I earn 1000 pounds per week before tax as a Ltd company.

If I am happy with the PAYE equivalent income of 697 per week then I could just pay myself this as a Ltd company and put the rest away in the company account.

Come end of tax year and filing returns I could then see how HMRC views my return and effectively I should have all the money I need to cover any excess tax as surely you would not pay more tax than at PAYE level.

Then if all is good I have a little nest egg.

What do you all think?

[Buffoon]

I think you are mad and in serious need of professional help.

You start from a dangerously fatal assumption: the taxman will be fair. They are not, never have been, and never will be. At the very best they will take the maximum they can from you. It is likely to trigger an investigation as they will make the assumption that you have something to hide.

Play the game the proper way and you are less likely to get hurt.

[Austin Wong]

ouch...ok..

I think I see where you are getting at.

Well maybe I should just stick to PAYE and leave London when I can get out of my lease in 5 mths.

Thanks

[VectraMan]

So you're going to ignore tax and see if they come knocking?

[Austin Wong]

NO ...

Hopefully try and find out if I can start a Ltd company properly if not then I will just have to stay with PAYE.

One thing I know about is you never ever ever **ck with the tax man.

I only know a fraction of how things work in this country and though I would put out the question. In NZ I would know much better how things work. And probably would not be asking left field questions.

[oraclesmith]

If you have your own limited company you can take your remuneration as a combination of PAYE salary and dividends. The mix depends on how confident you are about your IR35 position. In addition you can take up to £5k temporary directors loan during the year so long as you pay it back. You can also get your company (which is a seperate legal entity to you as a taxable person) to pay for business-related equipment, expenses, supplies etc.

A limited company comes with duties and responsibilities which should not be taken lightly. You need to talk to a good contractor or small business accountant.

In my opinion.

[Austin Wong]

Thanks for that.

I am still looking into my IR35 Status. I am not clear on it and am waiting to hear back from the agency I have been working with.

Due to the whole shake up with IR35, they cannot advise me in writing but at least a verbal indication will give me a starting point.

The agents I use have really looked after me to date in gettling me settled into UK.