CIS > PAYE > Setting up LTD.

[JDizzle]

Hi guys,

First post on the forum so go easy on me.

Ive been an electrician now for 12 years and started off as an apprentice and served my time under Lorne Stewart in Bristol. I left Lornes a year after coming out of my time and have been 'self employed' ever since (7 years).

It started off so well being under the CIS scheme but now being forced to go PAYE and use umbrella companies, is in my opinion, killing the enjoyment. How is everyone else finding it?

I am now considering setting up myself as a LTD company but Im a complete novice when it comes to the ins&outs and the pros and cons. Im just looking for a bit of advise really into what steps I should take to do this. Being stung for £100-200 NI every week is something I just cant comprehend and to be totally blunt im looking for the best way to make sure most of the £'s I earn stay in my pocket!

Cheers

 

[Leesparkykent]

Hi guys,

First post on the forum so go easy on me.

Ive been an electrician now for 12 years and started off as an apprentice and served my time under Lorne Stewart in Bristol. I left Lornes a year after coming out of my time and have been 'self employed' ever since (7 years).

It started off so well being under the CIS scheme but now being forced to go PAYE and use umbrella companies, is in my opinion, killing the enjoyment. How is everyone else finding it?

I am now considering setting up myself as a LTD company but Im a complete novice when it comes to the ins&outs and the pros and cons. Im just looking for a bit of advise really into what steps I should take to do this. Being stung for £100-200 NI every week is something I just cant comprehend and to be totally blunt im looking for the best way to make sure most of the £'s I earn stay in my pocket!

Cheers

Booking an appointment with an accountant would be a good start. There are ways of taking a low wage and being paid dividends etc. A good accountant can advise you on all this and form the company etc for you.

 

[Octopus]

Hi guys,

First post on the forum so go easy on me.

Ive been an electrician now for 12 years and started off as an apprentice and served my time under Lorne Stewart in Bristol. I left Lornes a year after coming out of my time and have been 'self employed' ever since (7 years).

It started off so well being under the CIS scheme but now being forced to go PAYE and use umbrella companies, is in my opinion, killing the enjoyment. How is everyone else finding it?

I am now considering setting up myself as a LTD company but Im a complete novice when it comes to the ins&outs and the pros and cons. Im just looking for a bit of advise really into what steps I should take to do this. Being stung for £100-200 NI every week is something I just cant comprehend and to be totally blunt im looking for the best way to make sure most of the £'s I earn stay in my pocket!

Cheers

Are you sure its just NI?

 

[derek]

Are you doing agency work? The new agency workers regulations are screwing many trades over, I ended up going limited, it cut out the payment agency fees as well as I could just invoice the agency as usual.Probably best if you speak to an accountant to check it is the right thing for you if you can't get your head around all the tax and legal implications. It is easy and cheap enough to set up your own ltd co. Don't know how much an accountant would charge, but if you know one sound them out (my brother is chartered so gave me some free pointers).

 

[IrishSpark]

Are you sure its just NI?

id say he's sure. The parasites that are umbrella companies make you pay both employer and employee NI. An absolute disgrace of a scam brought in to shaft those in construction even more!!

 

[JDizzle]

Booking an appointment with an accountant would be a good start. There are ways of taking a low wage and being paid dividends etc. A good accountant can advise you on all this and form the company etc for you.

I have booked an appointment with my accountant next weekend. I know last time I spoke to him about it he advised me against it so hopefully I can get more sense out of him this time round!

Are you doing agency work? The new agency workers regulations are screwing many trades over, I ended up going limited, it cut out the payment agency fees as well as I could just invoice the agency as usual.Probably best if you speak to an accountant to check it is the right thing for you if you can't get your head around all the tax and legal implications. It is easy and cheap enough to set up your own ltd co. Don't know how much an accountant would charge, but if you know one sound them out (my brother is chartered so gave me some free pointers).

Yeah its all agency work unfortunately I should of stated that in my OP sorry.
My accounts fees go up 4 fold for him to cover the paper & legal side of things. I think all in all it will cost me £800 for my accountant to cover it, which sounds a lot but in the long run id be paying a lot more in NI.

Are you sure its just NI?

id say he's sure. The parasites that are umbrella companies make you pay both employer and employee NI. An absolute disgrace of a scam brought in to shaft those in construction even more!!

Irish hit the nail on the head. It is a disgrace. I mean going from £12 p/m class 2 to ~£600 p/m has nigh on crippled me financially. It also doesnt help that none of the agency rates have improved to cover the influx of NI.

 

[Leesparkykent]

I have booked an appointment with my accountant next weekend. I know last time I spoke to him about it he advised me against it so hopefully I can get more sense out of him this time round!



Yeah its all agency work unfortunately I should of stated that in my OP sorry.
My accounts fees go up 4 fold for him to cover the paper & legal side of things. I think all in all it will cost me £800 for my accountant to cover it, which sounds a lot but in the long run id be paying a lot more in NI.




Irish hit the nail on the head. It is a disgrace. I mean going from £12 p/m class 2 to ~£600 p/m has nigh on crippled me financially. It also doesnt help that none of the agency rates have improved to cover the influx of NI.

Listentotaxman Guides: Contractors- LTD Company v Umbrella - The Free UK PAYE Salary Calculator Wage Calculator Income Tax Calculator 2014 / 2015

A brief summary with examples.

 

[JDizzle]

Listentotaxman Guides: Contractors- LTD Company v Umbrella - The Free UK PAYE Salary Calculator Wage Calculator Income Tax Calculator 2014 / 2015

A brief summary with examples.

Thats great thank you

 

[Deleted member 26818]

There are still a few Agencies out there that do CIS.
Fastrack and PCR, are two that I know of.

 

[uksparks]

If your NIC is £600 per month, you are making a f************* lot of money!

 

[Octopus]

If your NIC is £600 per month, you are making a f************* lot of money!

hum.... Umbrella set ups means he has to pay employer NI too, unlike being SE, sole trader or Ltd

 

[happydundee]

By going Ltd, there are lots of ways to reduce your tax liability. Paying yourself minimum wage. Putting wife on the books as bookkeeper on minimum wage.
I get paid 10k a year, and pay my wife 10k a year. I then take a dividend from the company. You can also use vehicles that are classed as company vans such as crew cab pickups as opposed to cars.
You need a good accountant who understands all the rules.
It's worth it at the end of the year, when you see your tax bill.

 

[IrishSpark]

If your NIC is £600 per month, you are making a f************* lot of money!

Not really, £1000 a week under umbrella will leave you paying that.

 

[Octopus]

By going Ltd, there are lots of ways to reduce your tax liability. Paying yourself minimum wage. Putting wife on the books as bookkeeper on minimum wage.
I get paid 10k a year, and pay my wife 10k a year. I then take a dividend from the company. You can also use vehicles that are classed as company vans such as crew cab pickups as opposed to cars.
You need a good accountant who understands all the rules.
It's worth it at the end of the year, when you see your tax bill.

That will ONLY work if she doesn't have a job!

 

[happydundee]

That will ONLY work if she doesn't have a job!

She does have job, she is my bookkeeper. My son has just got his NI number, so he is also getting 10k a year from June.

Dividends are the best way to take money out of company though, no NI contributions and tax is only 20%.

Company pension contributions are also a good way to reduce Tax, if you can wait till you are 55, to get your hands on the cash.