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Bounce back tax

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    #11
    Originally posted by oilboil View Post
    You are obviously doing it wrong, plenty of people make a profit on providing services. Maybe you meant "you won't necessarily be able to make as much profit"???
    A company can't make profit while providing service "inside IR35", it's impossible.

    Comment


      #12
      Originally posted by oilboil View Post
      If you are a more traditional company that requires more than just you to make money this spending it on payroll makes sense. You can't get out of COVID cash-constraints because you can't pay your staff to make your widget, and you can't sell your widgets because you've no money to pay the staff to make them. The loan just alleviates one side of the problem. If your business is otherwise viable, you will be able to sell the things you build with the loan cash and everything eventually gets back to normal.

      The other option of course is to take your £25,000 (based on a one-man limited IT consultancy turning over £100k), immediately turn it round as a £25k salary payment (incurring between £3-£10K in tax and NI - depending on other payments you make this year) then bankrupt the company and go out of business. It's essentially a £25K grant so long as you have no plans to use the company again
      I would be weary of doing this. How would you explain it as anything other than attempting to extract the loan for personal use which is prohibited.

      What legitimate reason would a business have for issuing such a large bonus to an employee when they have lost their revenue stream. Maybe you can come up with some creative rationale or just hope it never get queried.

      Comment


        #13
        Originally posted by oilboil View Post
        If you are a more traditional company that requires more than just you to make money this spending it on payroll makes sense. You can't get out of COVID cash-constraints because you can't pay your staff to make your widget, and you can't sell your widgets because you've no money to pay the staff to make them. The loan just alleviates one side of the problem. If your business is otherwise viable, you will be able to sell the things you build with the loan cash and everything eventually gets back to normal.

        The other option of course is to take your £25,000 (based on a one-man limited IT consultancy turning over £100k), immediately turn it round as a £25k salary payment (incurring between £3-£10K in tax and NI - depending on other payments you make this year) then bankrupt the company and go out of business. It's essentially a £25K grant so long as you have no plans to use the company again
        Option 2 seems to be preferred approach


        Sent from my iPhone using Contractor UK Forum

        Comment


          #14
          Originally posted by elsergiovolador View Post
          A company can't make profit while providing service "inside IR35", it's impossible.
          which may be true but is entirely irrelevant to the question or the discussion.

          See You Next Tuesday

          Comment


            #15
            I see Starling bank has had to borrow £300M as ran out of money to deliver bounce back loans, I predict they close applications fiverr even in next few days

            Same for tide, they are going live this week, I predict 2 days for them


            Sent from my iPhone using Contractor UK Forum

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              #16
              Originally posted by GhostofTarbera View Post
              I see Starling bank has had to borrow £300M as ran out of money to deliver bounce back loans, I predict they close applications fiverr even in next few days

              Same for tide, they are going live this week, I predict 2 days for them


              Sent from my iPhone using Contractor UK Forum
              Aren't they funds for the loans the Gov't owned British Business Bank Plc? Or is it just they who guarantee any loans issued under the Bounce back scheme?

              Either way, I doubt any banks would have problems getting seed funds / source funds as the risk is minimal, being effectively insured by the gov't.

              M

              Comment


                #17
                Originally posted by mjcp View Post
                Aren't they funds for the loans the Gov't owned British Business Bank Plc? Or is it just they who guarantee any loans issued under the Bounce back scheme?

                Either way, I doubt any banks would have problems getting seed funds / source funds as the risk is minimal, being effectively insured by the gov't.

                M
                Starling already begging funding circle for money, after burning its own money


                Sent from my iPhone using Contractor UK Forum

                Comment


                  #18
                  In my opinion, for short term personal funding(which is pretty much the only reason a LtdCo contractor would use the BBL) is that a director's loan is the most cost-effective way of getting the money out.

                  Paying it out as a salary means a nasty bit of tax, all for some short term financing. Dividends obviously incur less tax but you still are still possibly paying thousands of tax just to have some cash in your pocket now that you need to pay back in the future.

                  Not sure if I'm missing something here or if there is another better way of doing it?

                  Comment


                    #19
                    Originally posted by jamed View Post
                    In my opinion, for short term personal funding(which is pretty much the only reason a LtdCo contractor would use the BBL) is that a director's loan is the most cost-effective way of getting the money out.

                    Paying it out as a salary means a nasty bit of tax, all for some short term financing. Dividends obviously incur less tax but you still are still possibly paying thousands of tax just to have some cash in your pocket now that you need to pay back in the future.

                    Not sure if I'm missing something here or if there is another better way of doing it?
                    You personally owe the company money, so not as easy to walk away from the company and its debt.

                    Comment


                      #20
                      Originally posted by Old Greg View Post
                      You personally owe the company money, so not as easy to walk away from the company and its debt.
                      50K lasts a long time in retirement in Thailand / Vietnam

                      Just saying like


                      Sent from my iPhone using Contractor UK Forum

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