...It’s Still Alive and Dangerous
The all out war between the taxman and the one man service company has been going on so long now that most people are getting a little blasé about it. But all of the weaponry devised by HM Revenue & Customs is still out there, and one of the most controversial (at the time) and apparently powerful weapons in the taxman’s hands was the so called “IR35” rules, which actually came into force as long ago as the Finance Act 2000. If you provide your personal services through a limited company, don’t be fooled into thinking that this legislation is not really a live issue any more. It’s still very much alive and kicking. The purpose of this piece is to ensure that you don’t inadvertently fall into its grasp.
What follows is by no means of interest only to military historians. This war is still going on, and you need to know where the enemy’s strengths are.
Personal Limited Companies for Fun and Profit
It all started with the comparatively innocuous practice of individuals changing from being employees to providing their services through a limited company. This was well worth doing for a number of reasons.
Firstly, if the money was kept in the company, you ended up paying a measly amount of tax on your income, something like 20% instead of the 40% income tax you would have paid.
Secondly, national insurance flies out of the window, because, unlike the situation with an employment relationship, payments to a company aren’t subject to national insurance liability.
Thirdly, if you had a company with money in it, you could spread the tax load by giving the shares in your company to a spouse, and then paying dividends to that spo"
No comments:
Post a Comment