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new rules on companies??
I'm registering as self-employed for the first time. Although I've been working freelance for many years, i took voluntary redundancy from my full-time employment and now have the opportunity to work completely freelance.
I'm a visual artist, and also freelance as a writer and speaker on art, a researcher, and an event manager. I do already have a limited company - it was set up a while back as a prerequisite of applying for funds for a film project, and is now dormant. i have been reading the entries about being freelance versus being employed through a limited company, and heard that the rules have changed on this (IR35 etc, etc).
Is it anyone's opinion that, for earnings that are typically going to be between £20k and £30k, it's at all worth it going through the company route? I know the Companies House / Corporation Tax paperwork already, but imagine it will get more onerous if i start using the company again, and more intensively than i was doing before (i.e., paying myself through it)...
any little pearls of wisdom from anyone? apologies if this question is posted all the time, but I had an inkling that the situation may have changed with the new tax year.
I'm a visual artist, and also freelance as a writer and speaker on art, a researcher, and an event manager. I do already have a limited company - it was set up a while back as a prerequisite of applying for funds for a film project, and is now dormant. i have been reading the entries about being freelance versus being employed through a limited company, and heard that the rules have changed on this (IR35 etc, etc).
Is it anyone's opinion that, for earnings that are typically going to be between £20k and £30k, it's at all worth it going through the company route? I know the Companies House / Corporation Tax paperwork already, but imagine it will get more onerous if i start using the company again, and more intensively than i was doing before (i.e., paying myself through it)...
any little pearls of wisdom from anyone? apologies if this question is posted all the time, but I had an inkling that the situation may have changed with the new tax year.
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Jog On
Messages count : 10Likes count : 0Registration : 23 April 2008How many clients will you be working for simultaniously?
It can work in your favour to go through the Ltd as long as you're outside IR35.
IR35 is a murky subject where the waters get muddies with every new case but there are 3 main issues:
1. Right of substitution (ROS) - can you send in a replacement for yourself to do the work if you can't for some reason? Not to be confused with subcontracting but can you send in another employee of YourLtdco - is this in the contract? You do want this to operate outside of IR35
2. Direction & Control (D&C)- How much of a say does the client have on how you do your work - do you follow their 'systems' or yours? You don't want this to operate outside IR35
3. Mutuality of Obligation (MOO) - Are the client obliged to provide you with 'employment', and are you obliged to provide your services? You don't want this to operate outside IR35
If you have several clients at once, don't have a fixed place of work at any client site for any long period of time I wouldn't worry.
There is alot more to IR35 but the above 3 points seem to be the main ones according to authorities on the subject such as the PCG.
It's designed to catch out 'disguised employees' who work as contractors for the same client for years on end under the same conditions as permanent employees but instead operating Ltd companies and paying themselves as directors.
I am a Ltd company contractor (also an entrepreneur) I'm not worried about IR35 that much.
*EDIT* - So in answer to your original question of:
I think so - if you pay yourself as a director with a minimal salary (about £5.5k) and the rest in divis you'll be better off.Is it anyone's opinion that, for earnings that are typically going to be between £20k and £30k, it's at all worth it going through the company route? I know the Companies House / Corporation Tax paperwork already, but imagine it will get more onerous if i start using the company again, and more intensively than i was doing before (i.e., paying myself through it)...
Especially if you put your expenses through as well your corporation tax liabiliy (21%) be lower :cool2
You can earn £5.5k tax free - then the rest (minus expenses) is taxed at 21% CT as opposed to income tax + NI.
Dividends are tax free up to £33k I think?