Take a 45% cut post tax for a perm job  to just about pay off the bills or wait? Take a 45% cut post tax for a perm job to just about pay off the bills or wait? - Page 8
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  1. #71

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    Quote Originally Posted by jayn200 View Post
    Keep company open, get a bounce back loan, draw down as salary until you are able to find another contract (or run out of money)
    Exactly this


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  2. #72

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    Quote Originally Posted by jayn200 View Post
    Keep company open, get a bounce back loan, draw down as salary until you are able to find another contract (or run out of money)
    Sorry not clear - are you suggesting I take a salary as well as temp, as would that not mean I would then get taxed twice for having a second job? Or would my tax remain the same if I draw down the minimum salary allowance? Also, are there any exclusions to being accepted for the loan e.g is this affected by how long it has been since the company traded?

  3. #73

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    Quote Originally Posted by ziggystardust View Post
    Sorry not clear - are you suggesting I take a salary as well as temp, as would that not mean I would then get taxed twice for having a second job? Or would my tax remain the same if I draw down the minimum salary allowance? Also, are there any exclusions to being accepted for the loan e.g is this affected by how long it has been since the company traded?
    Yeah the only way to legally extract the money is to take a salary so you have to take the tax hit. If you end up finding a contract later on you can pay back the bounce back loan but this is just about survival right now.

    There is a qualifying criteria you have to meet. You should look it up, my answer wasn't meant to be complete but just a starting point for you to do more research if you hadn't considered using a bounce back loan.

  4. #74

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    Just checked out the criteria for applying on the British Business Bank website and the following doesn't sound very hopeful for using the loan as salary:

    "The business must confirm to the lender that the loan will only be used to provide an economic benefit to the business, for example providing working capital, and not for personal purposes..."

    I don't believe salary comes under "working capital"?

  5. #75

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    Quote Originally Posted by ziggystardust View Post
    Just checked out the criteria for applying on the British Business Bank website and the following doesn't sound very hopeful for using the loan as salary:

    "The business must confirm to the lender that the loan will only be used to provide an economic benefit to the business, for example providing working capital, and not for personal purposes..."

    I don't believe salary comes under "working capital"?
    I would follow the advice on here

    Quote Originally Posted by cwah View Post
    I just took a BBL and it's great for the war chest.

    For those trying to abuse the system, here's the list of do and don't with the money from the BBL:
    Do:
    - Pay yourself via PAYE salary.
    - Pay your pension because its company expense
    - Buy new equipment or anything related.

    Don't:
    - Pay dividend. You can only pay dividend from company profit. Loan is not profit so you shouldn't do that.
    - Pay corporation tax / vat. Again, it should have been money that stayed in your bank account to pay for that.
    - Give yourself a director loan. Not only it may be considered as income by HMRC for extra tax owed, but you may also be chased for debt by administrators should your company fold.

    As long as you do the "Do's", should you not be able to pay back the loan and decide to fold the company, you wouldn't owe anything to anyone.
    PAYE is fine, equipment is fine, pension might be pushing it a bit...
    merely at clientco for the entertainment

  6. #76

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    Thanks, not sure I agree with this bit though:


    "...should you not be able to pay back the loan and decide to fold the company, you wouldn't owe anything to anyone."

    What makes him think that a BBL wouldn't be owed if one chose to fold the company? I can't see anyone being let off the hook that easily with potentially up to £50k of government cash at any one time simply being written off! However reading that it can be paid back as early as you want is good to know.

  7. #77

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    Quote Originally Posted by ziggystardust View Post
    Thanks, not sure I agree with this bit though:


    "...should you not be able to pay back the loan and decide to fold the company, you wouldn't owe anything to anyone."

    What makes him think that a BBL wouldn't be owed if one chose to fold the company? I can't see anyone being let off the hook that easily with potentially up to £50k of government cash at any one time simply being written off! However reading that it can be paid back as early as you want is good to know.
    An LTD is its own entity. There is no personal guarantee on a bounce back loan. It's an unsecured loan. As long as you don't commit fraud you are okay.

    Ltds have bad debts all the time and go insolvent, it's just part of business. As long as the directors didnt commit fraud and don't have outstanding directors loans then it's not an issue.

  8. #78

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    Quote Originally Posted by jayn200 View Post
    An LTD is its own entity. There is no personal guarantee on a bounce back loan. It's an unsecured loan. As long as you don't commit fraud you are okay.

    Ltds have bad debts all the time and go insolvent, it's just part of business. As long as the directors didnt commit fraud and don't have outstanding directors loans then it's not an issue.
    This is a gross simplification. Complying with your statutory and fiduciary duties as a director cannot be simplified as “not committing fraud”. For example, how do you avoid the rules surrounding preference payments if you use the BBL to pay off a pre-existing company debt? There’s a lot of clueless directors out there taking BBLs and thinking they’ll be able to walk away without a fight. Make sure you understand your statutory and fiduciary duties before you take one.

  9. #79

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    Quote Originally Posted by jamesbrown View Post
    This is a gross simplification. Complying with your statutory and fiduciary duties as a director cannot be simplified as “not committing fraud”. For example, how do you avoid the rules surrounding preference payments if you use the BBL to pay off a pre-existing company debt? There’s a lot of clueless directors out there taking BBLs and thinking they’ll be able to walk away without a fight. Make sure you understand your statutory and fiduciary duties before you take one.
    Yes you're probably right (I'm not an accountant and not giving professional advice) but that still all falls under fraud... In this case he has 4500 in distributable earnings in his company still and probably most contractors on here will only ever have tax debt if they have any at all.

  10. #80

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    Quote Originally Posted by jayn200 View Post
    Yes you're probably right (I'm not an accountant and not giving professional advice) but that still all falls under fraud... In this case he has 4500 in distributable earnings in his company still and probably most contractors on here will only ever have tax debt if they have any at all.
    I wouldn’t call it fraud, more like ignorance. Some fraction of directors will get caught out by their own ignorance, whether by preference payments or misfeasance or ultra vires dividends or something else. It remains to be seen how aggressive the gov’t will be too. Just make sure you understand your responsibilities when taking a BBL and you’ll be fine if the business subsequently proves non-viable.

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