IR35 any additional taxes to those deducted at source?

[Beko]

Gotta love how patronizing some people when they don't even understand themselves...

Does anyone have any insights re my additional tax question? Or, as it seems to be transpiring with most of this stuff, does no one really know for sure?

[jamesbrown]

Every day is a school day!

But as this is only draft legislation, I assume it could change?

No, that can’t change. The whole point is that the client issues an SDS and the Fee Payer (could also be the client) deducts all applicable taxes (when inside). That is the central role of the Fee Payer. The yanked ESMs describe the accounting treatment for the PSC, but it’s just accounting. Obviously, it doesn’t make much sense to have a PSC under these circumstances and most clients won’t go this route anyway (rather, a direct or indirect employee), but that is the core of the legislation.

[jamesbrown]

Gotta love how patronizing some people when they don't even understand themselves...

Does anyone have any insights re my additional tax question? Or, as it seems to be transpiring with most of this stuff, does no one really know for sure?

I think I posted what you want to know above? Your accountant can apply either a net or gross accounting treatment, but the end result for you is a salary and/or dividend payment from YourCo with no further tax.

[KinooOrKinog]

Gotta love how patronizing some people when they don't even understand themselves...

Does anyone have any insights re my additional tax question? Or, as it seems to be transpiring with most of this stuff, does no one really know for sure?

You won't have to pay any CT because your company won't be making a profit. The entire value of your contract will be taxed as income the same as an employee. It doesn't matter how you 'take' the cash. It's already been taxed before it gets to you.

[Beko]

You won't have to pay any CT because your company won't be making a profit. .

Yes it will? If the company is paid e.g. £40,000 in fees and I take a £8600 salary, then, minus a few expenses, the rest is profit?

I know I could up my minimum wage salary payment to take the full £40,000 as salary but that was why I asked the question around additional taxes (specifically My Co Ltd having to now pay Employer's NI).

But jamesbrown thank you - sounds like you're saying that's not the case. I guess I just don't feel confident in it!

[jamesbrown]

But jamesbrown thank you - sounds like you're saying that's not the case. I guess I just don't feel confident in it!

Understood, but it is absolutely the case that you will pay no further tax. The mechanics are described in the ESMs, which have been yanked for unknown reasons, unfortunately, but your accountant will know how to handle this when the time comes. It is nothing more than an accounting problem.

[KinooOrKinog]

Yes it will? If the company is paid e.g. £40,000 in fees and I take a £8600 salary, then, minus a few expenses, the rest is profit?

I know I could up my minimum wage salary payment to take the full £40,000 as salary but that was why I asked the question around additional taxes (specifically My Co Ltd having to now pay Employer's NI).

But jamesbrown thank you - sounds like you're saying that's not the case. I guess I just don't feel confident in it!

If the company invoices 40k then the fee payer will deduct tax and NI from that 40k before it pays the money over if inside IR35. You no longer have the choice. The 40k is your salary.

[Beko]

If the company invoices 40k then the fee payer will deduct tax and NI from that 40k before it pays the money over if inside IR35. You no longer have the choice. The 40k is your salary.

The company would invoice e.g. 52,000
The client deducts NI and income tax, meaning the company receives a payment of e.g 40,000
What happens to this money once it's in My Co Ltd' account is up to me. I have to get it out to pay myself. Either as salary or dividends.
The company still makes a profit, albeit a lower one than before.

[Beko]

Understood, but it is absolutely the case that you will pay no further tax. The mechanics are described in the ESMs, which have been yanked for unknown reasons, unfortunately, but your accountant will know how to handle this when the time comes. It is nothing more than an accounting problem.

Ok thank you.

[wattaj]

The company would invoice e.g. 52,000
The client deducts NI and income tax, meaning the company receives a payment of e.g 40,000
What happens to this money once it's in My Co Ltd' account is up to me. I have to get it out to pay myself. Either as salary or dividends.
The company still makes a profit, albeit a lower one than before.

It is not the company's money. It is now yours. Take it out and spend it on a book about the off-payroll rules.