IR35 and Ltd Companies - Newbie Advice

[Stressman]

Hi all

I've been searching round the archives for info on this but have been unsucessful so hoped that someone could help with a query.

I'm just about to get into contracting, having worked permie all my life. As a newbie to this arena I've spoken to a number of colleagues who have set up Ltd companies and are going the usual dividend route. I have no real knowledge of IR35 other than what I've read on the HMRC website and it all looks very grey i.e. my role could be considered similar to that of a regular employee but as a contractor I cannot park on site, have no legal rights, pension, leave, meeting obligations, company responsibility, promotion, payrises etc. etc.

I realise this is/has probably been a hot topic already so don't want to start up any debates on this (and appreciate my opinions on IR35 above may not be entirely relevant with actual IR35 compliance) but could do with some advice on what I'm thinking of doing.

Can anyone advise on whether it is still possible to set a Ltd company and still employ my wife to do the books, but to pay her a reasonable salary for her work? Unfortunately she was made redundant but conveniently has over 20 years of finance/book keeping experience. Thus it would seem logical for her to work for me legitimately and to get paid a salary for doing so.

In terms of the dividend issue I am not particulary fussed about using these to the max in order to minimise tax/NIC's so am ok to litterally have zero dividend and to accept all income as salary (for me and my wife). I realise this probably sounds ludicrous as the whole point of the dividend route is to minimise NIC's etc. However, with the fear of IR35 etc. looming over my head would rather do it all so that I have complete peace of mind.

However I'm not sure if this is possible or still considered to be the wrong way of doing things. Thus any advice would be greatly appreciated.

Many thanks

Stressman

[northernladuk]

I'm just about to get into contracting, having worked permie all my life. As a newbie to this arena I've spoken to a number of colleagues who have set up Ltd companies and are going the usual dividend route. I have no real knowledge of IR35 other than what I've read on the HMRC website and it all looks very grey i.e.

Can't have looked very far. There are tons of IR35 discussions in the forum and the links on the right hand side. Research more.

my role could be considered similar to that of a regular employee but as a contractor I cannot park on site, have no legal rights, pension, leave, meeting obligations, company responsibility, promotion, payrises etc. etc.

You cannot park on site? Who the hell told you that? The company might have an individual policy on contractors parking elsewhere but that has nothing to do with IR35. You don't have meeting obligations? I wish. You can have payrises. You are a director of your own company. Give youself a payrise. I think you need to do a bit more research and learn it not listen to your colleagues..

Can anyone advise on whether it is still possible to set a Ltd company and still employ my wife to do the books, but to pay her a reasonable salary for her work? Unfortunately she was made redundant but conveniently has over 20 years of finance/book keeping experience. Thus it would seem logical for her to work for me legitimately and to get paid a salary for doing so.

In terms of the dividend issue I am not particulary fussed about using these to the max in order to minimise tax/NIC's so am ok to litterally have zero dividend and to accept all income as salary (for me and my wife). I realise this probably sounds ludicrous as the whole point of the dividend route is to minimise NIC's etc. However, with the fear of IR35 etc. looming over my head would rather do it all so that I have complete peace of mind.

So many issues you here. First employing people has absolutely squat to do with IR35. What you do within your own business is indeed your business. Secondly to have the attitude that you want to do zero dividend is just stupid. It is the way it works. Your wife is going to be your accountant. If she suggest zero dividend I would sack her on the spot. Why pay more tax when you don't need to just because you are too lazy to look in to it. Thats a poor attitude to start with. Number 1 rule from now on in is 'YOU ARE A BUSINESS'. THink like a business and act like a business and a lot of these questions will fall in to place. You are no longer a permie.

As you guessed your wife working for you has been done and you haven't looked very hard if you have been searching the forums.

Link1

Link2

Link3

ad infinitum......

You really cannot have this attitude if you are going to go contracting with a LTD. You have to learn what it is all about, you can't just swan through with little or no knowledge. You need to know IR35 inside out so you can attempt to negotiate yourself out of IR35, you need to learn the very basics of accountancy (or sack your wife) as this is your business's money now and you have to learn to maximise it to suit your needs. I bet after 6 months on the bench and no war chest you will lament throwing money away for no reason.

(How did I do Mal????)

[Wanderer]

However, with the fear of IR35 etc. looming over my head would rather do it all so that I have complete peace of mind.

HMRC's scare tatics are failing now so they are going to replace IR35 with something else...

Read this thread for an interesting take on IR35.

Go LTD, outside IR35, employ your wife and split the dividends between yourselves. Everyone does it, it's quite legitimate.

[SofaKingdom]

(How did I do Mal????)

Complete failure dimwit. No mention of the PCG anywhere.

[northernladuk]

Complete failure dimwit. No mention of the PCG anywhere.

lol