CIS > PAYE > Setting up LTD.

[Octopus]

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.

I meant another "proper" job paying tax!

You can't just "pay" your son £10K for doing nothing!

And what then - waste it - and pay the tax taking it out?

 

[happydundee]

I can pay him 10k for working during the summer holidays.

Who knows what tax laws will be in place when I am 55. I have paid no tax putting the money into a pension. I don't know what my financial situation will be in 10 Years. It's all about limiting your tax liability, and spreading your assets around

 

[Octopus]

I can pay him 10k for working during the summer holidays.

Who knows what tax laws will be in place when I am 55. I have paid no tax putting the money into a pension. I don't know what my financial situation will be in 10 Years. It's all about limiting your tax liability, and spreading your assets around

And then HMRC come and inspect you, and ask why you are paying your son well above the odds, and therefore reducing YOUR liability....... and then they start going back though your books for 5 years and you land with a big bill!

 

[JDizzle]

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

Ha god I wish! Im working nigh on 50 hours a week and taking home £550. The rates in Bristol are pathetic to say the least.

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.

I want to follow the rules as much as possible as cant be arsed with the grief. If my wife is currently employed, can I still pay her to be my secretary? Id also like to avoid giving her money if possible!
My accountant is pretty decent, ive gotten a better picture of the whole LTD situation now thanks to the forum so i guess i can say mission accomplished and thank you!

 

[happydundee]

And then HMRC come and inspect you, and ask why you are paying your son well above the odds, and therefore reducing YOUR liability....... and then they start going back though your books for 5 years and you land with a big bill!

Everything I do, is within the tax laws. HMRC cannot tell me how much I pay people. I was audited 2 years ago, and was a clean bill of health.

I don't do homers, everything goes through the books. I have no problems with HMRC.

I do everything possible within the rules to reduce my tax bill.

 

[happydundee]

Ha god I wish! Im working nigh on 50 hours a week and taking home £550. The rates in Bristol are pathetic to say the least.



I want to follow the rules as much as possible as cant be arsed with the grief. If my wife is currently employed, can I still pay her to be my secretary? Id also like to avoid giving her money if possible!
My accountant is pretty decent, ive gotten a better picture of the whole LTD situation now thanks to the forum so i guess i can say mission accomplished and thank you!

There is little point in paying your wife, if she already has a job, as she will pay tax at 20% on her 2nd job with you. Unless you need to keep below the 40% band.

 

[Octopus]

Everything I do, is within the tax laws. HMRC cannot tell me how much I pay people. I was audited 2 years ago, and was a clean bill of health.

I don't do homers, everything goes through the books. I have no problems with HMRC.

I do everything possible within the rules to reduce my tax bill.

Hum.... Say you make £40k profit, you pay your wife £10k for doing your books, and you pay your son £10 k for a few weeks work. Which leaves you with £20k for 12 months work.

Can I be a fly on the wall when you explain this to HMRC?

 

[plugsandsparks]

Its true there are more "options" about how you arrange your affairs if you are Ltd. I would say though that how you arrange this will be personal to you rather than one size fits all. That's why you either employ a good accountant who understands small businesses and director / employee, or learn for yourself.. For example i pay myself less than the tax threshold because if i pay myself 10K i will pay NI. Now because of my age , paying any further Nis are a waste of money. However you could pay yourself an amount which triggers NI at the lower amount and as such this will count towards a pension. My wife works in her own right and is a shareholder, our divs are taken to keep tax at 20% rather than super tax. i.e. lots of variables and £800 is OK if he gives you both personal and business accounts

 

[happydundee]

Hum.... Say you make £40k profit, you pay your wife £10k for doing your books, and you pay your son £10 k for a few weeks work. Which leaves you with £20k for 12 months work.

Can I be a fly on the wall when you explain this to HMRC?

I wouldn't do the type of work I do for 40k profit. I mainly work offshore and marine work away from home.

 

[Leesparkykent]

You can make your wife a shareholder so she can be paid a dividend equal to her share. Just means she sits on the board as a share holder (doesn't have to be an employee)

 

[Octopus]

I wouldn't do the type of work I do for 40k profit. I mainly work offshore and marine work away from home.

So how are you going to explain that to HMRC when your son doesn't go with you?

 

[derek]

He's just following the example of every Tory politician and most Labour ones who employ their kids and wives as researchers. Every accountant recommends it if your wife isn't working, so if is not against the law why shouldn't he, all the multi national companies use loopholes in tax law for their advantage so why shouldn't we?

 

[Deleted member 26818]

Offshore and marine work, I hope there's no duck house involved?

 

[happydundee]

So how are you going to explain that to HMRC when your son doesn't go with you?

There is nothing to explain. HMRC can do nothing. I am following the rules. I can employ my son for 1 day and pay him 10k. As long as he doesn't earn any more money, he doesn't pay tax.

There is no grey area, and it doesn't matter that a tax inspector sees me paying 3 people in my house 10k. That's the rules. That is the point in being Ltd.

 

[Octopus]

There is nothing to explain. HMRC can do nothing. I am following the rules. I can employ my son for 1 day and pay him 10k. As long as he doesn't earn any more money, he doesn't pay tax.

There is no grey area, and it doesn't matter that a tax inspector sees me paying 3 people in my house 10k. That's the rules. That is the point in being Ltd.

Which directly contradicts what my accountant says......