Outside IR35, can I get paid to a family members LTD company?

[Coral99]

Hi

I have just started working for a company who pay a day rate outside IR35, they have said I either need to get paid through the umbrealla company or they will pay my LTD company.

I do no have a LTD company but a direct family members does, can they pay my family members LTD company and then my family member pay me?

Thanks

 

[DWS]

Why don’t you just set up a Ltd Company!

 

[Coral99]

Why don’t you just set up a Ltd Company!

Hi thanks for replying.
Iits only temporary, a month or so, so would prefer not to go through the hassle for something which may not last very long and my family member already has a company set up.

 

[NicoJ]

Yes they can , but the contract would then be with that ltd company and any liability would then rest with them so the company paying may not agree. You would then need a separate agreement with your family member about payment.

All in all, pretty messy. If you don't want to set up a ltd yourself is there any reason you don't want to go through an umbrella?

 

[Coral99]

Yes they can , but the contract would then be with that ltd company and any liability would then rest with them so the company paying may not agree. You would then need a separate agreement with your family member about payment.

All in all, pretty messy. If you don't want to set up a ltd yourself is there any reason you don't want to go through an umbrella?

I dont understand how the umbrealla company works. Do they handle tax and everything?

 

[NicoJ]

I dont understand how the umbrealla company works. Do they handle tax and everything?

An umbrella company is essentially an outsourced payroll provider. So they would deduct tax and NI from your wage as if you were employed. There are some dodgy umbrellas about so if they are offering you an unreasonably high take home pay then they are almost certainly not above board.

It is your choice which umbrella you use so don't be bullied into using one that seems too good to be true.

 

[mattk]

How would your family member pay you? If it is as an employee, have you compared how much you'd receive compared to an umbrella?

 

[Frank the Insurance guy]

I do no have a LTD company but a direct family members does, can they pay my family members LTD company and then my family member pay me?

Don't do this!

You will legally be an employee and your family member and the Ltd company with therefore have a legal obligation to provide Employers Liability (EL) cover. As a Limited company they probably already have EL Cover, so will need to speak to their insurer to make sure the cover is extended to include the work you are doing.

Also, as the contract will then be with the customer and your family members business, they will need to amend any other insurance policies they have (Public Liability, Professional Indemnity etc) to include the work you are doing.

Ultimately your family member must be made aware that their Ltd company is responsible for the work you are carrying out and if anything goes wrong it is the Ltd co's problem.

Just go with the Umbrella company - much easier. You will need to speak to them to find out how it all works.

 

[mattk]

I dont understand how the umbrealla company works. Do they handle tax and everything?

Yes, you effectively become an employee of the umbrella and then deduct all taxes. However, they will also deduct Employer's NI, Apprentice Levy, their fees etc.

Usual take home is about 58% from the illustrations I've seen.

 

[Newchodge]

Does your family member already run payroll? Would they just be able to add you as a temporary employee? As others have said, the family member's company would contract with the client to supply the work. The figures would need to go through their accounts.

 

[UK Contractor Accountant]

its only temporary, a month or so, so would prefer not to go through the hassle for something which may not last very long

what happens after that contract expires?

You might find another outside IR35 contract.

Ltd co route seems the sensible route to follow- Umbrella's are expensive!

 

[Newchodge]

Umbrella's are expensive!

And some of them are unethical.