How JustAnswer Works:

  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.

Ask taxadvisor.uk Your Own Question

taxadvisor.uk
taxadvisor.uk, Chartered Certified Accountant
Category: Tax
Satisfied Customers: 4886
Experience:  FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
54961312
Type Your Tax Question Here...
taxadvisor.uk is online now

I've never lived in the uk (I'm non domiciled) and I'm about

Resolved Question:

I've never lived in the uk (I'm non domiciled) and I'm about to set up as a consultant? What are the benefits of setting myself up with PAYE and paying myself a director's salary? or down sides of not? Do I have to or can i just pay corporation tax at 20% and then take any money out by way of dividend?
Submitted: 1 year ago.
Category: Tax
Expert:  taxadvisor.uk replied 1 year ago.
Hello and welcome to the site. Thank you for your question.

Paying a salary
You should be aware of associated costs i.e employee and employer's national insurance.
You have to enrol for PAYE scheme and salary is taxed under PAYE.
Make use of personal allowance (tax year 2015-16 £10,600)

Salary is a tax allowable expense in company's accounts ... less corporation tax to pay.

Dividends only
You would not pay any income tax on the dividends provided your taxable income remains within the basic rate threshold (for tax year 2015-16 the figure is £31,785)
Dividends are distribution of taxed profits and no saving as far as company goes.

Combination of two
My clients take a salary and dividend but the salary is at or below personal allowance level and top it up with dividends on a needs basis bearing in mind tax implications of dividends if your taxable income puts you into higher rate tax band.

More information on how dividends are taxed can be found here

http://www.itcontracting.com/limited-company-dividends/


I hope this is helpful and answers your question.

If you have any other questions, please ask me before you rate my service – I’ll be happy to respond.

taxadvisor.uk, Chartered Certified Accountant
Category: Tax
Satisfied Customers: 4886
Experience: FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
taxadvisor.uk and other Tax Specialists are ready to help you
Customer: replied 1 year ago.

Thank you. That is helpful. I forgot about the deduction of the salary from the profits. If all goes well I'll fall into the higher tax bracket and then may need to see whether it is better to pay myself

People have told me to be careful about whether they HRMC woudl treat me as an employee or contractor. I have a couple of questions:

1) If I am going to pay myself a salary anyway as you set out above then do I still need to worry about this test?

2) If I do still need to worry about this test I found this test on the gov.uk website. Given my answers next to them in caps how do you think I need to approach this? Are any of these circumstances a problem? Is there something new I should think about? I want to establish myself as a consultant in this space so I don't want to be an employee of other companies as that restricts me. p.s sorry for the shouting in caps! :)

"Someone is probably self-employed and shouldn’t be paid through PAYE if most of the following are true:



  1. They’re in business for themselves, are responsible for the success or failure of their business and can make a loss or a profit. YES OFCOURSE BECAUSE IT IS MY COMPANY. I DON'T UNDERSTAND HOW IT COULD BE ANY DIFFERENT?

  2. they can decide what work they do and when, where or how to do it. NOT ALWAYS BECAUSE I WILL BE A CONSULTANT AND HAVE TO WORK WITH OTHER PEOPLE IN MY CLIENTS COMPANIES OR THEIR ADVISORS SO OFTEN I WILL AGREE TO SPEND TIME AT COMPANY PREMISES ETC. ONE CLIENT HAS OFFERED ME A PERMANENT DESK WHICH WOULD BE HELPFUL AS I DON'T ALWAYS LIKE WORKING FROM HOME AND CAN'T JUSTIFY SETTING UP MY OWN OFFICE AT THIS POINT

  3. they can hire someone else to do the work NOT REALLY BECAUSE THEY ARE HIRING ME AS A CONSULTANT BASED ON MY EXPERIENCE AND KNOWLEDGE. I CAN HIRE MYSELF AN ASSISTANT AND PAY THEM BUT THE COMPANY MAY OR MAY NOT LET THE ASSISTANT APPEAR ON THE FRONT LINE AS MY REPLACEMENT.

  4. they’re responsible for fixing any unsatisfactory work in their own time. YES

  5. their employer agrees a fixed price for their work - it doesn’t depend on how long the job takes to finish. NOT NECESSARILY. MY CLIENT'S WILL NOT KNOW HOW LONG A PROJECT LASTS OR WHAT EVENTUALITIES MAY COME IMBETWEEN SO USUALLY IT WILL BE ON AN ESIMATED NUMBER OF WEEKS PLUS POTENTIALLY COMMISSION AND THE OPTION TO EXTEND

  6. they use their own money to buy business assets, cover running costs, and provide tools and equipment for their work. ALL I REALLY NEED IS MY LAPTOP. WHAT ELSE WOULD THIS COVER? IF SOMEONE OFFERS ME AN OFFICE DESK FOR FREE AS PART OF THE DEAL HOW IS THAT CONSIDERED?

  7. they can work for more than one client" YES I HAVE TWO PARTICULAR CLIENTS I WANT TO WORK FOR. BOTH ARE VERY SMALL BUSINESSES, ONE A START UP AND THE OTHER VERY CLOSE TO A START UP. I THINK THEY HAVE ENOUGH WORK BETWEEN THEM TO MORE THAN FILL MY PLATE FOR A YEAR OR TWO BUT IF NOT I WILL LOOK FOR OTHERS.

Customer: replied 1 year ago.

Hello again Laughing

Sorry more questions just because you are so helpful!

I am a Swiss national (although i've never lived in Switzerland). On that basis I believe I can live and work freely in the UK. Correct?

I am also a NZ national (born and raised). May parents and only brother live there. I have lived overseas for over 8 years. I don't own any assets in NZ, although I am just beneficiary of a small trust there. I own an apartment in Dubai and have lived in Dubai for almost 7 years. After leaving the UK I intend to come back here to the sun and warmth :). I was trying to work out where my Domicile is given that I'm Non-Domiciled in the UK. I think I would be UAE Domiciled? Is that correct?

thanks a million.

Expert:  taxadvisor.uk replied 1 year ago.
Gemma, thank you for your prompt reply.

Based on what you have stated, in my considered opinion you are self employed. You can decide whether you wish to operate as a sole trader or form a LTD company.
The test is there for ascertain whether you fall under IR36 regime.

Your start up operation will have two clients atleast.

Don't worry about the test.

I am not 100% sure on whether you can freely live and work in the UK being a Swiss National.. you would have to check with respective authorities.

Your domicle is NZ (country of birth)

I hope this is helpful.
Customer: replied 1 year ago.

Thank you!Cool

Expert:  taxadvisor.uk replied 1 year ago.

I thank you for accepting my answer.

Your reward of a bonus is greatly appreciated.

Best wishes.

What Customers are Saying:

 
 
 
  • Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help. Mary C.
< Previous | Next >
  • Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help. Mary C.
  • This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!! Alex
  • Thank you for all your help. It is nice to know that this service is here for people like myself, who need answers fast and are not sure who to consult. GP
  • I couldn't be more satisfied! This is the site I will always come to when I need a second opinion. Justin
  • Just let me say that this encounter has been entirely professional and most helpful. I liked that I could ask additional questions and get answered in a very short turn around. Esther
  • Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help. Mary C.
  • This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!! Alex
 
 
 

Meet The Experts:

 
 
 
  • Sam

    Sam

    Accountant

    Satisfied Customers:

    7088
    26 HMRC expertise, PAYE, Self Assessment ,Residency, Rental Income, Capital Gains, CIS ask for Sam Tax
< Previous | Next >
  • http://ww2.justanswer.com/uploads/TA/Tax Expert/2013-8-21_231010_sam.64x64.jpg Sam's Avatar

    Sam

    Accountant

    Satisfied Customers:

    7088
    26 HMRC expertise, PAYE, Self Assessment ,Residency, Rental Income, Capital Gains, CIS ask for Sam Tax
  • http://ww2.justanswer.com/uploads/BI/bigduckontax/2013-8-12_222058_1.64x64.jpg bigduckontax's Avatar

    bigduckontax

    Accountant

    Satisfied Customers:

    2333
    FCCA FCMA CGMA ACIS
  • http://ww2.justanswer.com/uploads/TA/TaxRobin/2013-8-28_16186_femalebusinessprofessionalbinderhand11038485.64x64.jpg TaxRobin's Avatar

    TaxRobin

    Tax Consultant

    Satisfied Customers:

    524
    International tax
  • /img/opt/shirt.png taxadvisor.uk's Avatar

    taxadvisor.uk

    Chartered Certified Accountant

    Satisfied Customers:

    2845
    FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
  • http://ww2.justanswer.com/uploads/MS/MsAM/2012-6-9_16426_anna.64x64.jpeg Anna's Avatar

    Anna

    Teacher, writer, biologist

    Satisfied Customers:

    270
    Great research skills, variety of work experiences, teaching experience.
  • http://ww2.justanswer.com/uploads/PD/pdheslin/2012-6-6_232056_pambig.64x64.jpg pdheslin's Avatar

    pdheslin

    Consultant

    Satisfied Customers:

    51
    20+ years of internet site creation and search engine optimization. Dozens of search tools at my disposal.