Limited Company Directors? Employed or Self Employed

[a1anm]

Myself and my partner have just switched from being a Partnership to a Limited Company with both of us being directors.

Wen we are completing forms and it asks what are employment status is do we still select 'Self Employed' or 'Employed'?

 

[90DC]

Self-employed.

 

[BusyVids]

You don't have a boss so you must be working for yourself.

 

[sanjiv]

A director is self-employed as he works for the company.

 

[Moneyman]

You what? Unless i have missed something a director is employed by the company and is therefor an employee. Even if he owns the company.
he can call himself self employed but technically he is an employee.

 

[algobusinesssupport]

I presume you own the shares in the company which would make you self employed. Not all company directors own shares in the company, only the ones that own 20% or more can claim they are self employed.

 

[faradaykeynes]

when you say switched from partnership, have you closed partnership or is it dormant? If you are not self employed in partnership then you have register your company for paye and get on to company payroll as employee. If directors get wages from company they are employees of company.

 

[smo]

Self-employed.

You don't have a boss so you must be working for yourself.

A director is self-employed as he works for the company.

EH? Since when??

A director is an employee. Tick the Employed box. You might find for motgages some banks consider anyone with a 25% or greater shareholding to be self-employed however in legal terms, and for HMRC purposes directors are employed.

 

[David Griffiths]

Directors are employees of the company, and are not self employed for tax purposes or for any other legal purpose.

However, some lenders will regard them (inaccurately) as being self employed, so the answer depends very much on what forms are being completed. Questions from potential lenders and rational logic are frequently poles apart.

 

[sanjiv]

You don't have a boss so you must be working for yourself.

A director is self-employed as he works for the company.

EH? Since when??

A director is an employee. Tick the Employed box. You might find for motgages some banks consider anyone with a 25% or greater shareholding to be self-employed however in legal terms, and for HMRC purposes directors are employed.

Whoops typo. I was responding to the first post and was trying to say employed as he works for the company. Sorry.

 

[90DC]

I still think they should tick the box "Self-employed" as employed implies they work for somebody else.

Self-employed means they work for themselves, regardless of the fact that they are directors of a company and therefore, employed by. So what happens when somebody asks to speak to their employer?

OP, what forms are you filling out?

 

[faradaykeynes]

You are confusing the ownership with directorship, normally for small companies directors are shareholders as well, for large companies or even for small companies that might not be case all the time. A director can be in office with out being shareholder, any wages director gets comes off via PAYE system and therefore EMPLOYEE of the company. Hope that clears

 

[sanjiv]

I still think they should tick the box "Self-employed" as employed implies they work for somebody else.

Self-employed means they work for themselves, regardless of the fact that they are directors of a company and therefore, employed by. So what happens when somebody asks to speak to their employer?

OP, what forms are you filling out?

But would you register as self-employed with HMRC?

 

[faradaykeynes]

If you run business via Ltd company then legally you and your company are two different legal personalities, company is an artificial legal person, hence limited in liability. Directors normally file self assessment return but not necessary have to be self employed. There is difference between fileing self assessment and being self employed, e.g a doctor is employed by NHS files self assessment to account for his/her professional subscription etc but they are not self employed. If you are self employed then you are subject to Class2 & 4 NI contributions which is not the same in self assessment. If some one ask for employer reference then it is the company who is employer.

Perhaps you are confusing owner directors of Ltd company from Mortgage lenders point of view, not all lender cater for owner director.

 

[Moneyman]

the earlier point of putting employee is often better than self employed if borrowing money.