Director + Contracting via Umbrella/PAYE

Discussion in 'Accounts & Finance' started by billybob99, Feb 14, 2020.

  1. billybob99

    billybob99 UKBF Regular Free Member

    1,373 365
    To summarise;

    • An existing Ltd co. that makes money and some of that money is drawn out as salary each month.
    • Business is plodding along on autopilot.
    • Offered a 12 month contract for an agreed XXX a day.

    Unfortunately the big boys offering the contract have just put a blanket ban on all contractors (one man bands operating behind a Ltd co.) - they are thinking either Umbrella company or PAYE.

    My question is, do I have to terminate my employment with the Ltd co. in order to get a P45 to pass on to this new employer?

    Ideally would like to stay on the payroll of existing Ltd co. and work for new external company.
     
    Posted: Feb 14, 2020 By: billybob99 Member since: Apr 23, 2013
    #1
  2. Scalloway

    Scalloway UKBF Legend Free Member

    15,684 3,313
    It depends how you want your payments from the umbrella company to be taxed. If you want to have your personal allowance set against that income then issuing a P45 from your existing company would be the answer. The company would need to re-engage you with a BR tax code, ie paying 20% tax on all your salary.
     
    Posted: Feb 14, 2020 By: Scalloway Member since: Jun 6, 2010
    #2
  3. billybob99

    billybob99 UKBF Regular Free Member

    1,373 365
    Helpful as always Scalloway.

    Does the same apply if going down the PAYE route?

    I'm guessing I have to disengage with my Ltd. co and re-engage in any scenario?
     
    Posted: Feb 14, 2020 By: billybob99 Member since: Apr 23, 2013
    #3
  4. Scalloway

    Scalloway UKBF Legend Free Member

    15,684 3,313
    If the company you are going to work for is going to be your main income for a while then a P45 is the answer.
     
    Posted: Feb 14, 2020 By: Scalloway Member since: Jun 6, 2010
    #4
  5. billybob99

    billybob99 UKBF Regular Free Member

    1,373 365
    Make sense, will do that for now.

    Cheers.
     
    Posted: Feb 14, 2020 By: billybob99 Member since: Apr 23, 2013
    #5
  6. NicoJ

    NicoJ UKBF Regular Free Member

    172 23
    Sorry to disagree, but there is no reason to issue a P45 unless you want to.

    When you sign up with the umbrella/paye, tick that this is your main job and your personal allowance will be allocated against that income. Any salary you take through your ltd company would then be taxed as BR (as a second job).
     
    Posted: Feb 15, 2020 By: NicoJ Member since: Mar 27, 2017
    #6
  7. Newchodge

    Newchodge UKBF Big Shot Free Member

    13,146 3,413
    Agreed. P45's should be issued when you no longer work for an employer, however they are rarely used by new employers as they are often not available in time and there is no real need for them with RTI
     
    Posted: Feb 15, 2020 By: Newchodge Member since: Nov 8, 2012
    #7
  8. Adam93

    Adam93 UKBF Regular Free Member

    330 62
    I would suggest a 0T tax code would be more appropriate if you will be a higher rate tax payer to avoid an underpayment of tax throughout the year.
     
    Posted: Feb 15, 2020 By: Adam93 Member since: Jan 18, 2018
    #8
  9. Newchodge

    Newchodge UKBF Big Shot Free Member

    13,146 3,413
    To answer the original point. What do you see as the benefits of using an umbrella as opposed to going PAYE with the new employer?

    Either way you should remain as an employee of your limited as you have business goijng through that. Once you are sorted in how you are paid by the new employer just tell HMRC how you want your tax free allowance apportioned.
     
    Posted: Feb 15, 2020 By: Newchodge Member since: Nov 8, 2012
    #9
  10. billybob99

    billybob99 UKBF Regular Free Member

    1,373 365
    Thanks guys interesting points.
     
    Posted: Feb 15, 2020 By: billybob99 Member since: Apr 23, 2013
    #10
  11. billybob99

    billybob99 UKBF Regular Free Member

    1,373 365
    I had a feeling, just wasn't sure, appreciate the advice.
     
    Posted: Feb 15, 2020 By: billybob99 Member since: Apr 23, 2013
    #11
  12. billybob99

    billybob99 UKBF Regular Free Member

    1,373 365
    I've just found out this employer has a blanket ban on umbrella companies as well, the offer on the table is via PAYE only now.

    This will be my first time working for someone else under PAYE but the recruiter mentioned paid holidays, pension and all sort of stuff, so I'm assuming I am just like all their other employees, except I'm on a 6 month fixed contract.
     
    Posted: Feb 15, 2020 By: billybob99 Member since: Apr 23, 2013
    #12
  13. billybob99

    billybob99 UKBF Regular Free Member

    1,373 365
    Understood.
     
    Posted: Feb 15, 2020 By: billybob99 Member since: Apr 23, 2013
    #13
  14. Bobbie Bean

    Bobbie Bean UKBF Newcomer Free Member

    4 0
    The wonders of IR35 begin.
     
    Posted: Feb 17, 2020 at 2:45 PM By: Bobbie Bean Member since: Feb 13, 2020
    #14
  15. billybob99

    billybob99 UKBF Regular Free Member

    1,373 365
    It's not really a wonder. Plenty of contracts available outside IR35, just not prepared to move that far from my family.

    And plenty of contracts inside IR35 where the day rate has been inflated to still give you the reward of a decent salary.
     
    Posted: Feb 17, 2020 at 5:28 PM By: billybob99 Member since: Apr 23, 2013
    #15
  16. MyAccountantOnline

    MyAccountantOnline UKBF Legend Full Member

    12,943 2,406
    To add to the comments already made if you are not going to be trading via your company for a while is it worth keeping the company? Might be just as easy to close the payroll and get the company struck-off if you can.
     
    Posted: Feb 17, 2020 at 5:41 PM By: MyAccountantOnline Member since: Sep 24, 2008
    #16
  17. billybob99

    billybob99 UKBF Regular Free Member

    1,373 365
    Ideally no because;

    It is an existing company with clients and retainers being paid every month.
     
    Posted: Feb 17, 2020 at 7:10 PM By: billybob99 Member since: Apr 23, 2013
    #17