Say I had a inside ir35 contract (private sector, post April) worth 100k, and I wanted my PSC to use 80k of that received revenue first on a separate project expense (eg paying a dev to make a new app I hoped would be successful) leaving 20k available to pay me as a PAYE salary, with tax and NI on the 20k, would that be allowable? Or would my ability to be entrepreneural and grow the company be greatly diminished if the revenue is earned through inside ir35 vs outside? Surely a business is there to be grown?
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Can PSC use ir35 revenue on other projects before deeming my salary?
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Originally posted by forumuser View PostSay I had a inside ir35 contract (private sector, post April) worth 100k, and I wanted my PSC to use 80k of that received revenue first on a separate project expense (eg paying a dev to make a new app I hoped would be successful) leaving 20k available to pay me as a PAYE salary, with tax and NI on the 20k, would that be allowable?
Or would my ability to be entrepreneural and grow the company be greatly diminished if the revenue is earned through inside ir35 vs outside?
Surely a business is there to be grown?
Welcome to the Party of Business (The Party Of Business | Vote Conservative) enjoy your stay. -
Inside IR35 isn’t a business. It’s an employee <> employer relationship only.
If you use a PSC, the agency would deduct the taxes first. That’s why your income is a salary."I can put any old tat in my sig, put quotes around it and attribute to someone of whom I've heard, to make it sound true."
- Voltaire/Benjamin Franklin/Anne Frank...Comment
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Originally posted by cojak View PostInside IR35 isn’t a business. It’s an employee <> employer relationship only.
If you use a PSC, the agency would deduct the taxes first. That’s why your income is a salary.Comment
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Originally posted by forumuser View PostSo after agency deducts taxes, remainder is paid to the Ltd, does it belong to the Ltd or me? And if say 60k is left after taxes, and I use 30k paying other projects, what is my salary?
It's highly unlikely they will allow you to use the Ltd. Your options are paye or umbrella.'CUK forum personality of 2011 - Winner - Yes really!!!!Comment
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Originally posted by forumuser View PostSo after agency deducts taxes, remainder is paid to the Ltd, does it belong to the Ltd or me? And if say 60k is left after taxes, and I use 30k paying other projects, what is my salary?
Sent from my iPhone using Contractor UK ForumComment
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Originally posted by forumuser View PostSo after agency deducts taxes, remainder is paid to the Ltd, does it belong to the Ltd or me? And if say 60k is left after taxes, and I use 30k paying other projects, what is my salary?with all the benefits that brings.
There was a Ltd company 5% expenditure allowance which is being removed April 2020.Comment
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The money you receive is your salary and you have to extract it from your company either as PAYE (with tax deducted) or into a pension.
If you were planning to create software and grow a business the time to do it was a while ago. Now you will have to treat it as a different business and invest your taxed income into it.merely at clientco for the entertainmentComment
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Originally posted by forumuser View PostSay I had a inside ir35 contract (private sector, post April) worth 100k, and I wanted my PSC to use 80k of that received revenue first on a separate project expense (eg paying a dev to make a new app I hoped would be successful) leaving 20k available to pay me as a PAYE salary, with tax and NI on the 20k, would that be allowable? Or would my ability to be entrepreneural and grow the company be greatly diminished if the revenue is earned through inside ir35 vs outside? Surely a business is there to be grown?
Before the 'reform', if you'd done that and said you were inside, if HMRC came calling and you ended up in a tribunal, you could have said, 'Obviously I'm in business for myself, not an employee. I didn't even take that money out, my company used it to hire someone else and develop a product.' It wouldn't have guaranteed you'd win, but it would be a strong argument and unless you had been really stupid re: IR35, you'd have won your case.
With the 'reform' you don't even get to make the argument. The client decides, your tax fate is sealed. If the client decides 'wrong', HMRC will sort them out in a year or two.
If you want to build a business, you either have to find a large client that will work with you on a B2B relationship or find a small client, so you still get to make the determination.
Either that or work as an employee (real or de facto) and start your business out of personal funds and build it up that way. But that will also obviously be slower and more painful.Comment
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