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For Those of You Trading As Ltd Companies
IainGlasgow
Messages count : 3
Likes count : 0
Registration :
16 November 2007
This is for all those who are trading as a one person limited company or thinking of becoming one.
I've been doing some research online and have come across various claims that as a Director of the company you are, for tax and legal purposes, classed as an employee of the company.
Okay that's nothing new but the claims I've read go further to suggest that if you are paying yourself less than the national minimum wage for the hours you work, you are (or more precisely the company is) breaking the national minimum wage act - which apparently could land you with a fine and a criminal record.
This seems a strange concept given that trading as a one person company and taking little or no salary has become something of a cliche. Infact I believe many organisations that hire freelancers often insist on dealing with an incorporated business or an umbrella company.
Other claims suggest the NMW only applies if you have a contract (written or implied) of employment with the company and that allegedly such a contract needs to exist if you want to claim working tax credit.
Anyone know what the score is on this?
Certainly the national minimum wage act was never intended to trap owner managers working alone in their business I'm sure and while the letter of the legislation may technically mandate minimum wage, I can't honestly believe it would be enforced in practice.
I've been doing some research online and have come across various claims that as a Director of the company you are, for tax and legal purposes, classed as an employee of the company.
Okay that's nothing new but the claims I've read go further to suggest that if you are paying yourself less than the national minimum wage for the hours you work, you are (or more precisely the company is) breaking the national minimum wage act - which apparently could land you with a fine and a criminal record.
This seems a strange concept given that trading as a one person company and taking little or no salary has become something of a cliche. Infact I believe many organisations that hire freelancers often insist on dealing with an incorporated business or an umbrella company.
Other claims suggest the NMW only applies if you have a contract (written or implied) of employment with the company and that allegedly such a contract needs to exist if you want to claim working tax credit.
Anyone know what the score is on this?
Certainly the national minimum wage act was never intended to trap owner managers working alone in their business I'm sure and while the letter of the legislation may technically mandate minimum wage, I can't honestly believe it would be enforced in practice.
- Contact in PM
TheLowTaxGroup
Messages count : 5Likes count : 0Registration : 3 August 2011
Hi IainIainGlasgow, post: 17963 a écrit : This is for all those who are trading as a one person limited company or thinking of becoming one.
I've been doing some research online and have come across various claims that as a Director of the company you are, for tax and legal purposes, classed as an employee of the company.
Okay that's nothing new but the claims I've read go further to suggest that if you are paying yourself less than the national minimum wage for the hours you work, you are (or more precisely the company is) breaking the national minimum wage act - which apparently could land you with a fine and a criminal record.
This seems a strange concept given that trading as a one person company and taking little or no salary has become something of a cliche. Infact I believe many organisations that hire freelancers often insist on dealing with an incorporated business or an umbrella company.
Other claims suggest the NMW only applies if you have a contract (written or implied) of employment with the company and that allegedly such a contract needs to exist if you want to claim working tax credit.
Anyone know what the score is on this?
Certainly the national minimum wage act was never intended to trap owner managers working alone in their business I'm sure and while the letter of the legislation may technically mandate minimum wage, I can't honestly believe it would be enforced in practice.
To clarify, a director of a company is exempt from National Minimum Wage legislation, unless (s)he has an employment contract, rather than a directorship contract. This usually applies to employees who climb the ranks to become a director and the contract covers their operations duties, rather than their directorial duties.
Hope this helps but should you have any further queries please do not hesitate to contact me.
Martin Mckechnie
Client Services Director
The LowTax Group -
