LTD Company Directors Salary and CIS

[Nightfox122]

Hi Everyone,

Hoping you can help me as I am a bit confused with CIS payments and Directors salaries etc. I recently set up my LTD company and just starting to trade. I am meeting my accountant next week and hopefully they will be able to shed a more comprehensive view on the matter. Basically if I do labour only work for example of £2,000 and the Contractor subtracts 20% for CIS giving me a nett pay of £1,600 if I then want to pay myself that as part of a directors PAYE salary I need to subtract tax from my nett pay again?

If someone could clarify or perhaps make it more clear for me I would greatly appreciate it. Seems a bit mad that you would get a 20% deduction and then a further reduction again before walking away with a basic wage and I have yet to find a clear answer on this.

 

[Squid]

If you are earning below a certain level then LTD Co may no be beneficial to you, your accountant will need to confirm the deduction for CIS as maybe you should be paying it as you bill the contractor. As LTD Co you pay yourself about £640 PCM and the rest in dividends, keep receipts for expenditure, travel and lunches. Check the NI rate as I think its the basic rate rate you pay, are you VAT or Nill VAT registered?

Remember office equipment, tools, computers are all tax deductible if used 100% for your business. (IT Contractor here LTD Co, don't ask me about the Christmas Tree and the Brompton bike ;o))))) )

 

[DJ Ovengloves]

Ignore me - I'm talking gash (accept the receipts but).

Good luck btw!


If you are operating as a business CIS should not be taken away as you invoice for a service provided and you are not an employee of the contractor. Your accountant will be able to advise the full story, but take receipts for everything work related.

 

[Pat H]

I do work that gets paid both ways. By invoice it goes into the company account and I get paid from that after deductions.
If I'm paid as an "employee" and deductions have already been taken I pay it into the company and take it directly out as is (as deductions already taken) I let the accountant sort it out at the year end as it has a slight impact on your tax code etc.

 

[Octopus]

Ignore what is written on here. Listen to your accountant - this is more complicated than you think

 

[Nightfox122]

Thanks for the quick responses. I am VAT registered as my first project has a good value and I estimate that i will pick up more work as I go so I went straight in for VAT.

I agree with Murdoch it is all very confusing and I will be taking the advice of my accountant. I did meet an accountant last week who seemed very un interested and seemed to confuse matter more than officially clear anything up which is why I am asking on here if anyone could shed any light.

 

[telectrix]

get a better money spinner.

 

[Octopus]

Or just ring HMRC - they are generally very helpful, but find another local accountant as being ltd, vat reg and having CIS to deal with sounds like a receipe for getting in a mess unless you know exactly what you are doing .,,,,

 

[Deleted member 26818]

If tax is deducted at source, you just pay yourself on paper the gross amount, deduct on paper the 20%, then when you do your PAYE/CIS accounts ask for a form to offset tax owed against tax already paid.

 

[ses]

If you earn more than around £30,000 A year under Cis work you can go and register as a contractor and then the tax is not deducted at source

As a company you have to pay corporation tax on company profit and as an employee you pay paye and ni on your wages but if your accountant is a good one then this will be almost zero and you can take dividends

The good accountant will be able to advise and offer the best method for you to take home the most money while not attracting the war hful eye of the HMRC