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bigduckontax
bigduckontax, Accountant
Category: Tax
Satisfied Customers: 3004
Experience:  FCCA FCMA CGMA ACIS
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I hope you can help.I have 30K debt I would like to pay

Customer Question

I hope you can help.
I have 30K debt I would like to pay off as soon as possible but not at the expense of accumulating too much more debt.
I am about to start a new contract paying £550 a day. I am not sure whether it is best to use my LTD Company or go PAYE.
Going the PAYE route will take me up to 15 months to pay the debt and there is interest on this due to it including a credit card, 1 secured loan, 1 guarantee loan and 1 car loan. I will obviously have my other tax liabilities but I essentially should take home an average of £7000 a month.
Going LTD will enable me to paye the debt sooner if I take away my personal tax liability, VAT and Corp tax and pay the remaining to the debt. With this route I will be liable to the Revenue for a large tax amount next April, but is this amount more than I would pay in interest for my debt if I go PAYE?
I am looking to understand the best route to take and need some help.
I realise there are new tax laws for LTD companies so taking all of that in to account, which route saves me the most money?
Please help.
Thanks
Merline
Submitted: 8 months ago.
Category: Tax
Expert:  bigduckontax replied 8 months ago.
Hello Merline, i am Keith, one of the experts on Just Answer, and pleased to ba able to help you with your question. Whichever way you turn on this question you are caught by Benjamin Franklin's dictum that in life there re but two certainties, death and taxes. Using a limited company will merely bring you within the rules in ir35 [ie in a PAYE relationship with the company] and in any event if you are a director of the company you must be remunerated through PAYE channels. Using a company to undertake this activity will only catch you in the long run and be an endless palaver administratively. Frankly it is much easier to be paid through PAYE which should make you tax neutral by the end of the tax year. I am so sorry to have to rain on your parade.
Customer: replied 8 months ago.
Thank you I think I havent been clear.I have 30K debt I would like to pay off as soon as possible but not at the expense of accumulating too much more debt.I am about to start a new contract paying £550 a day. I am not sure whether it is best to use my LTD Company or go PAYE through the agency that will place me in the new role.Going the PAYE route will take me up to 15 months to pay the debt and there is interest on this due to it including a credit card, 1 secured loan, 1 guarantee loan and 1 car loan. I will obviously have my other tax liabilities but I essentially should take home an average of £7000 a month.Going LTD will enable me to paye the debt sooner if I take away my personal tax liability, VAT and Corp tax and pay the remaining to the debt. With this route I will be liable to the Revenue for a large tax amount next April, but is this amount more than I would pay in interest for my debt if I go PAYE?I am looking to understand the best route to take and need some help.I realise there are new tax laws for LTD companies so taking all of that in to account, which route saves me the most money?
Expert:  bigduckontax replied 8 months ago.
Well as far as tax is concerned neither in the long run, but if you can clear your debt faster through the limited company route then that will save you interest and may be the more beneficial.
Customer: replied 8 months ago.
Sorry, your answer does not tell me anything more than I already know.I need to know how much I will owe the revenue after I put aside the below and then take the remaining to pay off my debt. I am looking for figures.VAT
Corp Tax
Pesonal Liability
Employers NI
Employees NILTD
I will be paid £550 a day
I will have VAT and Corp tax and Personal Liabililty to pay out of this
I will take the remaining to pay off my debt
How much will I owe the Revenue next April if I take the rest to pay off my debt?PAYE I will take home approximately £7000
£2000 of this will be used each month to pay my debt
After 15 months my debt will be clearIf I go the LTD route I need to compare what I owe the revenue with with the extra months it will take me to pay my debt to find out which is the cheapest route?I can pay the debt using LTD within 1 year (this has interest but can be cleared sooner. This also leaves me an amount I need to pay the revenue)
I can pay the debt using PAYE within 15 months (this is longer and this has interest)Are you able to please work out the figues and let me know?Thank you
Expert:  bigduckontax replied 8 months ago.
I am opting out of this question.
Customer: replied 8 months ago.
Thats disappointing. OK I will wait for somebody else.

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