Here are some notes available via my blog:
Notes surrounding the issue, am I self employed? HMRC’s criteria regarding who is and who is not self employed can be complex, but is narrowed down, to two very important points: are you responsible for losses incurred by your engagement, can you send a substitute in place of yourself to complete your contractual engagement and finally is there evidence of a master and slave relationship?
Driving (Taxi or LGV) through an agent or ‘Base’ has difficulties in complying with these clauses, meaning you are in contravention of HMRC’s IR35, which states that attending the same place of work continuously and submitting invoices to one single agent/contractor, defines you as employed and subject to tax at source and national insurance will be class 1. This is very similar to Health Care workers to include Midwifery and Surgeons, emphasising the need for a mixed portfolio of clients.
Accountants say ‘there is no such thing as a self employed driver’ this is a fact not an opinion! However there is a solution; operating through a limited company allows the director to gain income from whatever source they may choose (in line with the general activities of the company).
I do not favour the use of ‘service companies’ which by using the company as an umbrella, they distribute agreed expenses to directors arriving at a reduced tax commitment for the participants minus a fee, of up to £80.00 per month. HMRC will close this loophole shortly, harming those wishing to comply, for the benefit of their client’s.
The above is in the public domain, but I will now explain how KPB Monarch will facilitate the tax advantages of working self employed. Forming a limited company is easy, via the internet, an ‘off the peg’ company uses existing dormant names which have ceased trading, or you can choose to incorporate a name of your choice (providing there is no other of that name) for reasonable rates. Typically £26 to £130 the more expensive do come with benefits, in that you receive hard copy of articles of association and memorandum plus share certificates, minute log etc, KPB Monarch can do all this for you, at no additional cost.
Once you have your company, all returns, year ends and online submissions are completed by KPB Monarch. The task of minimising the client’s tax is the single most important factor governing the relationship. The ease at which this occurs is unique in that 12 envelopes are sent to you; your task each month is to post them back to KPB (at no cost to you) filled with every invoice relevant to the business, then those that you are unsure of, then finally throw what’s left in too, how easy is that?
Let KPB Monarch be the judge of what is claimable! From this we will extract the information to maintain accurate accounts all documents can be returned to you complete with information as to how you are progressing. The year end will be forecast for you, so that you can make provisions for the tax liable.
The most important piece of information The Cost is not last on purpose, now you are familiar with how it works, what are the costs and savings? These can be summarised as follows:
Taxed at source (PAYE)
Your gross wages/ income/ fees at 640.00 per week are liable to Just short of 25.5% deductions achieving a net wage of £476.80.
Limited Company (KPB Monarch)
The calculation of corporation tax is more complex but KPB Monarch has for many years achieved between 15 to 18% deductions from gross.
Best: 15%, net wage £544.00
Worst: 18%, net wage £524.00
Within the calculations is the administration of the clients affairs, fixed for 2018/2019 @ £8.77 per week. This is not an additional expense, it is within the 15 to 18% deductions! The only criteria is that this figure be paid to KPB Monarch directly each month via a standing order of £38.00
More information as to how we work and our commitment to clients is available on this website. The formation of the original company is not included in these calculations as it remains a single one off expense within the first year.
Remember for 98% of our clients we make savings in excess of our fees.
We have negotiated with CW to apply for a fresh bank account for the business without your attendance, just a few short questions on the phone and your holding account is in place!
I hope this information has been helpful to you, call me on 01788 550176 if you are unsure of any aspect. Alternatively, you can send us your enquiry through the website to set in motion an action plan. Engage our services and start saving TAX!
Paul A King ICPA AICB