Decisions to be made

1. Early living requirements

The tax efficient way of running a company is to pay a small salary monthly and a large divided quarterly. The salary would generally be in the region of £500 per month

This can cause difficulty in the early months and we therefore discuss with you the most tax efficient way of meeting your living requirements.

For companies caught by "IR35" we recommend withdrawing the full company income as directors salary subject to allowable deductions or expenses.

2. Company or Private Vehicles

In most cases private ownership is preferable. The following information would be required to consider this further :-

• Value of car
• Make and model of car
• Date of first registration
• Petrol or diesel
• Home to work mileage
• Estimated private mileage

It was generally preferable to retain a car in private ownership and charge business mileage at the FPCS rates. This generality does not apply where the income is caught by IR35.

3. VAT Registration

An option. No loss except in administration time. Enables recovery of VAT incurred on computer purchases, mobile telephone, etc. The Flat Rate Scheme enables a surplus to be gained from VAT registration and the merits of this are discussed on an individual basis. The decision is not effected by IR35.

4. Pensions, Life Assurance etc.

The level of pension contributions is no longer dependent on salary payments, although I would suggest saving through ISA’s may be more appropriate. This is a matter for separate consideration. Where IR35 applies there is more incentive to pay pension contribution as the premium reduces both income tax and national insurance liabilities.

5. Operating The System

• We issue an information sheet for you to provide the information to form the company.
• When the Certificate of Incorporation is available you open bank account.
• Fax duly authorised time sheets to…… (the agency)
• Receive payment from the agency.
• Utilise CTS spreadsheet to calculate monthly salary, track transactions etc...
• Make PAYE remittances monthly or quarterly.
• All end of year returns, accounts and taxation liabilities notified by CTS.

6. Notes On Book-Keeping

There are no onerous book-keeping requirements for contractors. We provide a spreadsheet although we can work from bank statements in many cases.