Page 1 of 1

Should I Register as a company

Posted: July 30th, 2022, 12:50 pm
by BallouBear
Hi, firstly I have to confess my complete lack of knowledge in this area!

My situation is that I have recently retired. My pension certainly allows me a decent lifestyle.
However I missed the buzz from work. I was approached to provide consultancy on a part time basis.

This provides me with an additional income of around £15k/annual.

Obviously I always pay my taxes, but I started to ponder if there was a way to reduce my tax from the £15k.

Someone suggested I should register as a company but, as mentioned, I have a complete lack of knowledge. Is there a saving to be had? Would it be worthwhile or just hassle to save a few pennies?

Any advice would be much appreciated.

Moderator Message:
Originally posted on "Retirement Investing" -- obviously the wrong place, but equally, there's no obvious right place, either. So here it is. Be gentle: new poster! --MDW1954

Re: Should I Register as a company

Posted: July 30th, 2022, 1:12 pm
by mc2fool
BallouBear wrote:Someone suggested I should register as a company but, as mentioned, I have a complete lack of knowledge. Is there a saving to be had? Would it be worthwhile or just hassle to save a few pennies?

There's a discussion on that at viewtopic.php?p=450972#p450972.

You may also want to look at IR35 mentioned in that thread first, to understand what it is. https://www.gov.uk/guidance/understanding-off-payroll-working-ir35

Re: Should I Register as a company

Posted: July 30th, 2022, 1:48 pm
by PhaseThree
BallouBear wrote:Hi, firstly I have to confess my complete lack of knowledge in this area!

My situation is that I have recently retired. My pension certainly allows me a decent lifestyle.
However I missed the buzz from work. I was approached to provide consultancy on a part time basis.

This provides me with an additional income of around £15k/annual.

Obviously I always pay my taxes, but I started to ponder if there was a way to reduce my tax from the £15k.

Someone suggested I should register as a company but, as mentioned, I have a complete lack of knowledge. Is there a saving to be had? Would it be worthwhile or just hassle to save a few pennies?

Any advice would be much appreciated.


I did pretty much the same thing - retired then returned to do some consultancy on a part time basis. As discussed in the linked thread IR35 is the issue.

I looked at options regarding registering as a company and working outside of IR35 as a way to minimise tax.I didn't get very far.
I was informed by the client that the consultancy work would be inside IR35 and that they would not consider employing me in any other way. From their point of view they see non-IR35 workers as a potential liability and a real headache.

So probably the first thing to do is to check with the client to see what their view of you moving to be outside of IR35 would be.

Re: Should I Register as a company

Posted: July 30th, 2022, 3:03 pm
by Alaric
BallouBear wrote:Is there a saving to be had?


The trick used to be to exploit the arbitrage between the rates applied for individual taxation, including National Insurance, and Corporation Tax.

Thus when earnings would be in the higher rate of taxation, the idea was that salary was no higher than the personal allowance or a minimum to acrrue pension rights with the balance of spendables coming in the form of dividends. There was also more opportunity for expenses to be offset against tax.

As mentioned in other posts, IR35 and other measures have made this now you see it, now you don't employment illusion more difficult to pull off. So much so that those who are genuinely independent of their clients can find it difficult to prove so.

Re: Should I Register as a company

Posted: July 30th, 2022, 3:15 pm
by bluedonkey
For £15k/yr, I can't see the advantages outweighing the extra hassle/admin expense of having a ltd co.

Re: Should I Register as a company

Posted: July 30th, 2022, 4:09 pm
by Lanark
Lets say you do this job for 4 years before you retire completely.
You could pay the money into a company and pay yourself a very small salary so building up a lump sum inside the company. After retiring, you continue getting paid, but by spreading it out over many years you lower the tax paid.

As bluedonkey says the expenses of running the company, doing accounts etc may not make it worth while and if you make the mistake of dropping dead at the wrong time, it may backfire and your heirs will end up paying more tax.

Re: Should I Register as a company

Posted: July 30th, 2022, 9:34 pm
by tjh290633
I did this for a few years after retiring. The ability to claim expenses cuts down quite a lot of the tax liability. I did not bother going down the limited company route.

Bear in mind the sort of thing that you can claim for, which is quite wide. HMRC offers a lot of guidance on expenses which you can claim.

TJH

Re: Should I Register as a company

Posted: August 1st, 2022, 5:21 pm
by Charlottesquare
tjh290633 wrote:I did this for a few years after retiring. The ability to claim expenses cuts down quite a lot of the tax liability. I did not bother going down the limited company route.

Bear in mind the sort of thing that you can claim for, which is quite wide. HMRC offers a lot of guidance on expenses which you can claim.

TJH


But for most you have to incur the expense. Seems hard work spending £100 to save £19 unless you were going to spend the £100 that way anyway.

Re using companies, unless you can do accounts and CT600 yourself then for £15k turnover hardly seems worth the hassle ,especially if paying accountant his fees.

Re: Should I Register as a company

Posted: August 17th, 2022, 1:44 pm
by BallouBear
Firstly, my apologies for such a late reply. I had a medical scare, but hopefully all ok now.

Secondly, a massive thank you to all that have provided some advice.
I have found this to be incredibly beneficial.

From what I have read here and the links provided, I cant really see many positives of changing.

Once again, thank you.