Ltd company locums - budget changes

RE: Ltd company locums - budget changes

Neil Wheadon — Tue, 14 Jul 2015 14:32:42 GMT

One suggestion

Pay your pension as employer contribution rather than employee. It will reduce the dividend so you'll gain 7% on pension. You'll be no better off than at the moment but if you are putting £6000 in per annum (after tax relief paid) it will go some way to reducing the dividend 7% tax starting in April next year, something I'm going to do and just checked this with an accountant

Neil

RE: Ltd company locums - budget changes

rachaelyost — Tue, 14 Jul 2015 08:43:02 GMT

Oh joy! Decided to go back to locum work about a month ago. Tax confuses me already so I guess I had better speak to an accountant!

RE: Ltd company locums - budget changes

Neil Wheadon — Mon, 13 Jul 2015 23:09:19 GMT

This is an independant thought

With the living wage set at £7.20/hour, someone somewhere must be looking at sole trader ltd company paying themselves the personal allowance of £10600 and thinking that it doesn't quite add up. If you are working more than 162 days a year with 9 hours in a day, you are paying yourself a salary at below the living wage. In effect there is a secondary legal? Pressure to pay yourself a higher salary and as a result a lower dividend. swings and roundabouts I guess.

Personally being a ltd company I don't know quite what to do yet. i do though agree with Clive that the vast majority of practices are happy wih self employed status, but I have begun to see the tide turn in favour of wanting locums to be Ltd or umbrella.

Thanks for pointing this out Robin

Neil

RE: Ltd company locums - budget changes

Robin Grimmer — Mon, 13 Jul 2015 20:25:49 GMT

[quote user="Clive Ansell"]

You are still better off;

I'm self employed and pay 20% income tax and 9% NI, only if I earn above £42385 will I pay tax at 40%

As a Ltd Co, you pay corporation tax at 20%, set to become 18%, then 7.5% on dividends over and above £5000, and no NI. Still less than someone self-employed.

[/quote]

Not if you include accountancy fees. I'm currently paying nearly £1200 for my annual company tax return.

RE: Ltd company locums - budget changes

CatherineThomas — Mon, 13 Jul 2015 18:13:45 GMT

I spoke to my accountant this morning and she thinks it's still worthwhile to be a ltd company although I will end up paying more tax on the dividends but i'd pay less than if done any other way. She did say that there was some mention of scrapping the relief on NI but it hadn't been confirmed and they are hoping they'll back out of that.

RE: Ltd company locums - budget changes

Clive Ansell — Mon, 13 Jul 2015 15:52:24 GMT

You are still better off;

I'm self employed and pay 20% income tax and 9% NI, only if I earn above £42385 will I pay tax at 40%

As a Ltd Co, you pay corporation tax at 20%, set to become 18%, then 7.5% on dividends over and above £5000, and no NI. Still less than someone self-employed.

RE: Ltd company locums - budget changes

Clive Ansell — Mon, 13 Jul 2015 15:15:06 GMT

[quote user="Robin Grimmer"]Locums have been forced in to Ltd company status as many practices will not accept self employed status. (Not their fault I hasten to add)[/quote]

I have not really found this to be the case at all, all five of my regular practices are happy with my self-employment status and I have have encountered no issues whatsoever with HMRC over the last 14 years with self-employed self assessment status. I have only once had to turn down work because of not being a Ltd Co, and that was with the CVS group (Their loss, not mine).

Can you wrap up being a Ltd Co, and go back to good old self-employed? or just go PAYE?

RE: Ltd company locums - budget changes

Robin Grimmer — Mon, 13 Jul 2015 12:51:18 GMT

The big corporations will save a fortune with a 2 per cent reduction in corporation tax. But this will affect many small businesses and locums. There's already an awful lot of bureaucracy involved in running a Ltd company and accountants and other costs. Locums have been forced in to Ltd company status as many practices will not accept self employed status. (Not their fault I hasten to add)

A locum who's company profits are 25000 for the year will now have to pay an additional £1500 tax on top of the corporation tax they are already paying. Unless there's any way round this then I'm going to have to reconsider locum work.

RE: Ltd company locums - budget changes

Bob Russell — Mon, 13 Jul 2015 11:06:55 GMT

Double taxed to remove many of the advantages of Ltd company status. the conservatives backed themselves into a corner by agreeing that income tax, NI and VAT would not go up. Big companies would not appreciate a hike in corporation tax so small businesses get the bill. I accept this has been a loophole but it is going to affect many, many business owners, usually small companies.

Prices go up?