Calculating tax for contracting

are you receiving this, or paying that rate to someone ?

Phil

I'll be receiving it. However it's not a fixed rate and therefore I want to work out the numbers before I agree to it.

so will the other party be paying you via PAYE as an employee or paying you gross as a sole trader ?

Under PAYE you'll lose over 30% of it in tax and NI and they'll pay employers NI on top if that's the "gross pay" number.

Phil

I'll be a sole trader. Although I haven't set up a limited company yet.

so if you are a sole trader (self employed) the income will be taxed on a self assessment form. Assuming your personal allowances etc are being taken care of somewhere else then you 'll pay Class 4 NI contributions on profit and income tax on the profit.

Arggggggggggggggggggggggggggggggggh

Write out 100 times (no, make it 1000)

"A sole traded *does not* trade through a Ltd Company".

The two statuses (?) are mutually exclusive. You are one or the other, never both (for the same job).

tim

Keep your hair on, you're beginning to sound like someone who shall remain nameless (but knows who he is), and if you don't watch out, you'll end up looking like him too.

I'm not sure that's entirely correct. You could run a Ltd Co which contracts with a customer to do a job. Your company could, in turn, use you to do the actual work involved, and could do so either by employing you or by sub-contracting you as a sole trader.

"tim" wrote

What if the person does some work for the Ltd Co as a sole-trader, as well as being an employee (and potentially a director/shareholder)?!

PS - How many Tim's do we have around here? ....

can be done, income as a sole trader / self employed is taxable and NI charged via self assessment, as an employee paid via PAYE or dividends as a shareholder are all possible, even directors fees.

a Tim and a tim ?

Oh, has someone stolen it again?

How will I know.

Do you really think that this idea is going to pass scrutiny?

I've heard of people trying it but it doesn't sound like it should really work

tim

aren't there two Tims?

tim

Sole trader and a limited company are two entirely different things.

I think you need to do a bit more research!

I did it for a couple of years. I was working part time with a 1/3 share in a company. I collected a royalty from the company whilst being in a partnership with my wife. It was useful to mop up her allowances. I and another were investigated regarding IR35. I was OK since I received a "royalty" where my income was associated with the success of the product! The sales chap escaped but it was implied he was sailing closer to the wind.

It was a mistake! I meant to say Sole Trader.

"tim" wrote

Yeh, looks like *two* Tims and a tim - I am not the OP! ;-)

"Timothy Lee" wrote

Oh no! A fourth Tim !!

Once you've torn it all out, ...

Yes.

Leaving aside whether it *would*, why do you think it *should* not?

Nope, perhaps you better explain why?

A Sole trader is an individual trading on their own account with full liability. A person trading through a limited company has limited liability (and that's before we get to the tax differences)

tim

How does correcting a spelling mistake help.

It is legally incorrect to claim that a person trading through a limited company is a sole trader. The terms are not interchangable.