In need of advice regarding limited company

[Nurse moe]

Evening! I’m new here so please bear with me, this is probably going to be long. I have so many questions but no idea where to start. I’m a nurse currently working through an agency. I’m with an umbrella company, but I’ve been advised by colleagues to set up a limited company, I suppose to get more out of my hard earned money. I’ve heard about IR35 - don’t know much because the more I read about it the more confused I get. So my first question really is, is it worth setting up a limited company? My agency give me shifts in various hospitals in different cities/towns so I travel a lot but I’m unable to claim these expenses from my umbrella. Advise and suggestions will be greatly appreciated. Thank you.

 

[Truemanbrown]

Hello, as you may have heard the recent mini-budget has reversed the amendments made in 2017 and 2021 to IR35.

The result of these amendments is that since 6 April 2017, workers providing services to a public sector body (e.g. NHS) through an intermediary have not needed to consider IR35.

Instead, under the off-payroll working rules, responsibility for determining whether the worker would be an employee if the services were supplied directly falls on the public sector body.

If the worker would be classed as an employee were this the case, tax and National Insurance must be deducted from payments to the worker’s intermediary, and paid over to HMRC, together with the associated employer’s National Insurance.

Following the introduction of new off-payroll working rules in the public sector in April 2017, it was reported that that locum nurses saw their net income slashed by roughly a third after blanket IR35 assessments made it impossible for NHS workers to secure outside-IR35 status.

From April 2023, the responsibility for determining if IR35 applies to their cases will fall back on the locum nurses (i.e. you if you set up and acted through a limited company).

I will not go into detail about IR35, but I do suggest that you talk to the Agency and ask them what they are planning to do - although the IR35 amendments are being reversed, will the agency start taking on personal service companies or stay as they are at present.

 

[Mark T Jones]

The first question is whether the agency will actually pay you through a limited company?

When I did agency work (admittedly of a more general nature) they absolutely insisted I was on payroll

 

[Nurse moe]

Thank you for your replies.
I have asked the agency and they are willing to pay through limited company from April 2023.
I have also asked a colleague who’s on limited and apparently the agency pay him through an umbrella, and the umbrella pay him through limited and make sure he’s outside the IR35 (not sure how). Umbrella take 4% of his income.
If I do set up a limited company would it be more tax efficient for me? As I understand, I have to pay tax as well on my income paid to me from my company on top of corporation tax. I know if I just pay myself within my personal allowance it would be tax free, but honestly with the cost of living rising, it will not be enough.

 

[@aiteoconsulting]

The key to this will be to assess your role and find out if it is outside IR35. From April 2023 that would be your responsibility as a director of the company (rather than the engager's responsibility). You should do this using one of the IR35 tools out there (IR35 Shield and Kingsbridge are two which spring to mind). If your assessment comes out with an 'inside IR35' result, there's no point running through a limited company IMO.

If you want to try something for free, use HMRC's own IR35 checker here: https://www.gov.uk/guidance/check-employment-status-for-tax

... but bear in mind that this checker is heavily criticised by some in the industry. But at least it might give you some idea.

 

[Truemanbrown]

The key to this will be to assess your role and find out if it is outside IR35. From April 2023 that would be your responsibility as a director of the company (rather than the engager's responsibility). You should do this using one of the IR35 tools out there (IR35 Shield and Kingsbridge are two which spring to mind). If your assessment comes out with an 'inside IR35' result, there's no point running through a limited company IMO.

If you want to try something for free, use HMRC's own IR35 checker here: https://www.gov.uk/guidance/check-employment-status-for-tax

... but bear in mind that this checker is heavily criticised by some in the industry. But at least it might give you some idea.

The main thing is that CEST ignores is 'mutuality of obligations'.

'Mutuality of obligations' is where the contractor has an obligation to provide and the subcontactor has the obligation to take that work. In this situation, there the worker would be classed as an employee.

If you do go the limited company route then get any contract you receive from the Agency checked by an expert.

 

[IanSuth]

Also if you have to go Umbrella be VERY careful which you go through.

I remember a few years ag a story about one that was actually incorporated in i believe jersey or the Isle of Man - a nurse got pregnant tried to claim SMP and was told she had been working for an overseas company so not got the entitlement she expected

When you start trying to get out of the standard employment contracts you also walk away from some rights so do your sums carefully - even your holiday and pension payments whilst PAYE are worth a significant %