Hi Everyone i want to set up a small advisory company for some work I do within my industry. I already have the work in place and the people want me to help them. I would not need to lay out any money for staff and offices or anything like that. I would charge my time at an hourly rate, so for eg , 3 people I know want me to price up jobs for them they would pay say £65 an hour and I may over a month complete 20 hours for them. I would simply invoice them and they would pay me less the tax etc as a subcontractor to them . I want to keep this separate from my daytime job so hence setting up a small company.
I would assume then that 50 % of this would then be payable to my IVA. I do complete overtime already and use the 10% allowance and 1/2 of anything above this does go into my IVA
Hi Michael. Without knowing the exact details of your IVA, I would assume you could keep 50% of the earnings. However, if you set up a ltd company you will initially be paid a salary and dividends would be due at a later stage. By keeping the salary low this would impact positively on the cashflow and you could then pay out dividends from a healthy company.
The alternative is to operate as a consultant and 50% of the profits would be payable. You could estimate your profits and pay an amount to the IP each month and sort the balance out when the accounts have been filed and agreed. It would be worth discussing the pros and cons of both methods with your accountant and IP.
Irrespective of which option you choose you must be very careful to pay HMRC on time as failure to do so would lead to the collapse of your IVA. Good luck with the new centure.
It really does depend upon the terms of your own ICA, and the view your IP would have towards these earnings. There has to be some incentive for you to work in your own time, and it is only fair that both you and the creditors share from this.
You don't have to initially draw a salary from the company - and can take all of the money out by way of dividends, and if your main income is in excess of the upper taxation limits then this could be more tax efficient for you.
And I agree with Michael that you need not set up a separate company, as you are entitled to trade in your own right as a self-employed person as well as being employed by someone else - providing your contract of employment allows tis of course.
MCJ
The only way they can deduct tax on your behalf is if you register under the old CIS Type Scheme. In order to do this you would be provided with a UTR Number which confirms you Taxable Payment method (ie Gross or Net)
Is it for works within the construction industry - I presume.
hi yes it is for the construction industry, Mel , Hi melanie I am in the 40 % tax bracket anyway , is a dividend a lump some payment every 1 year or so , and again I assume half would go the IVA?
You can declare dividends more regularly than once per year, by passing an appropriate board resolution at regularly convened general meetings of the comapny. If this was additional income in excess of your normal earnings, you would have to pay some of it over to the IVA - the exact amount would be dictated by the terms of your individual proposal.
