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Thanks for your question - I am Sam and I am one of the UK tax experts here on Just Answer.
What advice do you need ? (although I can advise that you should not be a limited company - and you are in breach of the IR35 legislation, which states were it not for the fact you were a limited company would you in fact be an employee - and the answer to this is yes, you should be an employee of the agency.
So there is an issue if you have already proceeded down this route
Let me know what specific advise you needed
Thanks for your response
But it IS in breach of IR35 legislation so its important that you are aware of this - and the agency has made you complicit in this - yet it will be you that suffers the penalties when HMRC discover this.
And the fact you are taking dividends which should be taxed as salary - you also are then putting yourself in a further position of not paying sufficient tax or National Insurance.
But as it would appear that you already are aware of this (as you asked re the IR35 position) then how can I help with the figures you have provided.
Its an illegal arrangement as the IR35 legislation clearly stipulates - under which this falls - you do not create clients nor suffer a loss as well as the benefit of making profits, you do not work the hours you want - with your own tools - you do not provide a substitute of you can manage to attend the client - you work in their premises - this also breaches the employment legislation and self employment legislation.
However - you at least now are aware you are in breach of the law by agreeing the contract in this way - and its up to you should you continue but at least you are aware of the penalties and reasons why HMRC would successfully challenge this.
But you need to speak with the agency as you must have agreed to be paid dividends but what this basically means is that you have received salary (less tax Employees and employers National Insurance ) plus dividends
So the £833 needs to be grossed up to find the figure pre Tax and National Insurance
Then add this to the dividends and this should come in at the agreed annual salary
So what is the annual salary? And what is your tax code and I can calculate this for you
Then without a full history I can only estimate but I would then need to know whether this was just six months work so from October 2015 to March 016 (6 payments) is that right ?
So your first payment was 31st Dec is that right ? (April and May 2016 are in the new tax year)
I am getting very confused - I though you just wanted help with the tax year 2015/2016 for the year end?
So I need to know what you received from the date this employment began to 05/04/2016 -
Or are you needing this for something else - perhaps you could expand on what you need
And what do you need the information for (completing a tax return for self assessment or just for your own information) and did you receive 9 payments for the tax year 2015/2016?
I need more information
And finally was £24600 the amount you received in total for the period 01/06/2015 to 05/04/2016 OR what your annual amount would be had you worked a full tax year?
May to May -
To whom are you reporting as the tax year runs 6th April to the following 5th April
And did you actually receive £24600 between June 2015 and 05/04/2016 or its what you would have received had you worked from April 2015 to 05/04/2016?
I really need you to provide the information asked for as we do not seem to be making any progress here - and I cannot calculate figures unless I have the full picture.
So please answer ALL the questions -
Would it be easier if I send you an additional services request for you to telephone me ? This would incur an additional charge but I feel it would progress matters in a more expedient fashion
Then this is not IR35 or salary - this is Corporation tax and your Company House and HMRC Corporation Tax return - I shall opt out
Hello, I am Keith, one of the experts on Just Answer, and pleased to be able to help you with your question. You have been advised correctly, see your penultimate post.
I see my colleague has opted out.
You should report this income on the company's Corporation Tax (CT) Return. The net surplus made in the relevant year will then be taxed under the CT regime at a flat rate of 20%. These returns must be filed on line. If the company subsequently makes payments to you, particularly if you are a director, these must be made under PAYE arrangements with appropriate Income Tax (IT) and National Insurance (NI) deductions made. Any wages paid by the company reduces the company's exposure to CT. Dividends do not enter into the CT computation at all although they do form part of the recipient's income for IT purpose.
I do hope that you have found my reply of assistance.