Ltd Company PAYE question

**Ardesco** · 11 July 2007, 15:34

No point in having a LTD if you aren't going to draw dividends. Taking it all as PAYE means you may as well be caught by IR35.

**a7awo** · 12 July 2007, 09:10

I thought if I was putting my invoice 'all' thru PAYE then I would be paying the full NI quota and the tax man would be happy regardless of my contract.

Secondly, I am paying myself a directors PAYE wage at 'minimum wage' but I have heard others who run their own ltd are working on a 25% of their invoice as directors PAYE wage. Why do they do this?

**MrRobin** · 12 July 2007, 09:16

If your contract 'passes' / is not caught by IR35 then you can do basically do what you want with regards to paying yourself all PAYE, minimum wage & dividends, half way house etc. If you don't 'pass' IR35 then you are obliged to take all the contract income as PAYE salary.

Originally posted by DaveB

There is a school of thought that says paying yourself [above minimum wage] is a good move to avoid undue interest from HMRC but this is debated on a regular basis with no firm conclusions.

http://forums.contractoruk.com/thread18871.html

**Ardesco** · 12 July 2007, 09:37

Originally posted by a7awo

I thought if I was putting my invoice 'all' thru PAYE then I would be paying the full NI quota and the tax man would be happy regardless of my contract.

Yes they will, but if you are not caught by IR35 you can just take a minimum wage and put the rest through as dividen which drastically reduces your tax bill meaning you get to take thousands more home at the end of the year.

If you are going to put all your cash through as PAYE don't worry about IR35 it won't affect you, but you are paying a lot more to the tax man than you need to.

I'm sure some of the esteemed members of the forums will be able to provide some figures.

**Cooperinliverp00l** · 12 July 2007, 10:22

I have a questiosn then. Tax year April to April and Company Year end also April. If you are on a contract taking you up to say September which was outside of IR35 so you took min sal and max dividends come Sept you get given a contract that is caught by IR35 do you only then pay full TAX and NI on income recieved from the contract or from previous contract as well as it is within the same personal tax and company year.

**Ardesco** · 12 July 2007, 10:37

IR35 is on a per contract basis. You could have 3 contracts running at the same time where 1 is caught by IR35 and 2 are not caught by IR35.

**DaveB** · 12 July 2007, 10:44

Originally posted by Ardesco

IR35 is on a per contract basis. You could have 3 contracts running at the same time where 1 is caught by IR35 and 2 are not caught by IR35.

Although running concurrent contracts is in itself a pointer to being outside IR35 and in business as a legitimate co.

**Ardesco** · 12 July 2007, 10:49

Originally posted by DaveB

Although running concurrent contracts is in itself a pointer to being outside IR35 and in business as a legitimate co.

Nope, IR35 is on a contract by contract basis. Having multiple contracts at the same time does not impact the IR35 status of any specific contract, each contract is assesed individually and on its own merits. This being said IR35 is mostly dead nowdays anyway....

**Cooperinliverp00l** · 12 July 2007, 11:11

Originally posted by Ardesco

Nope, IR35 is on a contract by contract basis. Having multiple contracts at the same time does not impact the IR35 status of any specific contract, each contract is assesed individually and on its own merits. This being said IR35 is mostly dead nowdays anyway....

Are you saying that as IR35 is on contract basis you could on one contract be paying full TAX and NI and then on the next contract taking home min sal and big divs. How would that work out in terms of recording it on accounts and assume you have to tell the accountant that the reason you have only taken divs for that certain period is because your contract is out of IR35

What do you mean by mostly dead ?

Ltd Company PAYE question