Putting Ltd Co on hold

[PurpleGorilla]

Have applied for a PS insider ir35 role which mandates using an umbrella. Rate rivals private sector - but obviously take home will be less. But it’s close to home, interesting work, and 12months minimum.

I guess I can put my ltd co on hold? And just let the business outgoings get paid by the cash reserves (phone, email, toner cartridges, bananas etc)?

I’m trying to weigh up the overall impact - for future mortgage applications, managing money, that this fluctuation will bring...

Any help or advice on this would be hugely appreciated.

[Hobosapien]

The impact is you'll just be contracting via a different vehicle (umbrella instead of Ltd).

I'm in a similar position and the only thing I've done so far is remove myself from my Ltd's payroll so PAYE for myself is only active for the umbrella to keep it simple. Ltd is otherwise treading water in that no income being received and no significant outgoings, other than accountancy fees/Companies House filing fees/HMRC (corp tax) related.

You could consider making the Ltd dormant, which is a more official position to reduce the paperwork, but you'll still need to file accounts and all the Companies House stuff, so not that much of a workload saving overall. Dormancy requires absolutely no activity on the accounts, so probably safer to close the bank account to be sure, then it's not much different to closing the Ltd other than it's easier to resume trading later.

Closing down would be simpler if you can easily extract any remaining profit, such as the simple liquidation path if distributable profit is under £25k otherwise need more formal voluntary liquidation process.

Depends if you need the Ltd or think you will as to which path makes most sense. You can see how the new contract goes for a while before making a decision on what action (if any) to take with the Ltd.

[PurpleGorilla]

Thanks Hobo.

Impact wise - I’m trying to balance the drop in take home, as well as the drop in earnings for my ltd co accounts when considering things like mortgage applications. I’ve worked hard to get four years of solid books.

But the gig is pretty sweet. And I’m thinking long term end game that it could be a good place to end my career...

In all honesty - I don’t think contracting outside ir35 is going to last much longer anyhow.

[Hobosapien]

Depends how soon you think you may want to do anything mortgage related and the likely amount (LTV).

Initially you have proven accounts filed and could get your accountant to confirm you are good for any loan based on current situation since last set of account available at Companies House.

While in contract via the brolly you can use a contractor specialist to base a mortgage application on your standard contract rate. May be better than more traditional brokers/providers that will look at PAYE and other income/outgoings.

If you end up a permie then the normal rules apply regarding PAYE where a number of months in the job will likely be required to prove income from payslips.

Timing is key so worth mapping out the potential avenues for getting a mortgage (or any other loan) while transitioning from contractor via Ltd, to contractor via brolly, to permie. Each step down that road makes some approaches more beneficial and only you, or your accountant, or specialist mortgage broker will know which is best for your current financial situation as you go down that road.

Let us know how you get on as we too may have similar paths to travel if as you say contracting outside IR35 becomes even harder and the evasion of permiedom (disguised or otherwise) via Plan B's proves futile.

[PurpleGorilla]

Thanks Hobo.

I’ve asked my accountant for advice on what factors to consider in terms of those different paths and what should be considered. Descent roles are quite rare - so I’m loathed to dismiss it - especially as future mortgage needs are a possible, but not might not happen.

Also a consideration is that this would look excellent on my cv and be great for networking and other future roles in the industry.

[barrydidit]

Descent roles are quite rare

They just keep going down, huh?

[PurpleGorilla]

Is it technically possible to work an umbrella gig, keep the books ticking over on the Ltd and do the odd day consulting here and there (just adding to the turnover). I have the odd piece of client work is not want to pass over.

I’m not fussed about paying a wage/dividend from the Ltd co. But it would be nice to keep my pension DD running...

[northernladuk]

Of course it's possible. You can be employed and have a company as well. I think you are over thinking this. Accountant can sort out the different income streams to keep you as efficient as possible.

People like Dolan Accounting and Contractor Umbrella have this as part of their service offering. It's not as complicated as you are wanting to make it.

[PurpleGorilla]

Thanks guys - appreciate the help.