KiwiGTI

OK, the 2 NZ trips were a blip, had to go back because of family.

New York trips were all 4 day ones, over a weekend, including Easter.
Most Europe ones were weekends.
Last NZ trip was 2 weeks over Xmas - only 7 working days.
Thailand 1 week each time.

And my figures relate to now and I've already said that they reflect cashflow, rather than totally disposable income.

An average fully worked month would be 20 days = £11,000
Less rent and bills it seems my figures are pretty reasonable.

Bubba po

I'm sorry, I couldn't help noticing that you're considerably richer than me.

Suresh

But you're in a clique, which makes you more much powerful here where it counts in cyberspace

Bubba po

How does it? I don't have any power at all! Hardly any of we in the Hutch have plus membership.


Anyway, stop sending the thread off-topic, that could get us both an infraction.

Suresh

Maybe you lot should go IT contracting and then the exorbitant 'plus' costs would be just a drop in the ocean of your disposable income (back on topic, phew)?

KiwiGTI

And to be honest I think I am hard done by. I deserve a lot more as the following article suggests

IT suppliers overcharging UK.gov | The Register

falkster

I think we are quite lucky as we have 2,500 a month spare after all our bills!!!

I have still managed to get a visa bill of over 10k built up that will be fully paid off in the next 2 weeks!

The more you earn, the more you want and spend!

Deep Singh

I'm a pain in the **** but with say £11000 income and say £1000 rent + £500 bills unless you pay virtually no tax how is that even £9k cashflow?

AudiLover

KiwiGTI =

sti-04!!

Per annum ?

GaryK

I struggle to see why these sorts of questions even get asked in the first place. Its like the 'how much do you earn', why do you want to know?

a) The poster doesn't know probably 99% of the respondants
b) If a respondant earns one pound or one million pounds a year what single bit of difference will it make to the person asking the question?

Hey maybe its me, I think its bloomin rude to ask people what they earn/how much they have cos its none of my god-damn business!

GCollier

There are ways and means...if you're prepared to take them. An ex-contractor-colleague of mine reckons he'll take home about 92.5% of his gross income by setting up some arrangement whereby he "sells" his contract to an offshore company. Other schemes I've seen include taking advantage of tax free nature of directors loans in conjunction with FX and forward contracts on heavily depreciating currencies.

Gary.

KiwiGTI

I explained twice already in this thread that it doesn't include tax. However I only really pay corporation tax anyway. I don't earn enough to pay much PAYE/NIC and the rest is in Dividends which means you have to be pulling close to £80,000 out of the company (as a couple) before you start paying anything personally.

Deep Singh

I'm going to carry on with this as I might be missing out on a good tax break. Even if you are a limited co how do you figure you can earn/pull out £80k before you pay any tax? Also you can't give your missus 50% of the shares because the tax man won't have it as there is no way you can justify that your wife makes a 50% contribution to a company that is based on your skill as an IT bod. She may look after the admin side but thats not a 50% contribution is it?

I'd be fascinated to know as if you are right I could be paying a lot less tax!

Deep Singh

Yes. £650 per month = £7800 per annum

£7800/£185000 = 4.2% gross. If the flat is worth £215k then a new buyer would get £7800/£215000 = 3.6%! With irs perhaps hitting 6% thats quite a bit to bridge. Thats why imho btl is on wobbly ground

KiwiGTI

That's where you are wrong.

http://www.theregister.co.uk/2005/12...ns_tax_appeal/

This has now gone to the House of Lords and they are widely expected to uphold this ruling.

If they didn't it would have a significant impact on divorce proceedings, as their basis is on partnership for the husband and wife.

john banks

Deep, I've looked at converting our practice to a limited company, but the best gains are if you are single handed, it isn't worth the changes/charges to do it for our partnership of three.

What remains then is a partnership that has very tight accounting. Expenses that can be claimed have to be justified. Net result is an unavoidably high tax bill.

If we make wild expenses claims we get investigated and the claims get overturned. The expense and hassle of an investigation aren't worth it, and the GMC wouldn't look kindly on issues of financial probity. Our accountant is too cautious of his own professional credibility to let us get away with it anyway.

Result is that whilst our day rates may be very similar to IT contractors, once you account for working a four day week, all the tax, national insurance, paid holidays, superannuation the bottom line seems a lot less impressive after all this is accounted for.

GCollier

Deep...you simply split the shares with your wife, and your ltd company pays out dividends to its shareholders (the two of you) and small companies corporation tax on these profits (which was about 20% when I was contracting years ago). These dividends are considered tax-paid at the basic rate of tax, so you only pay any additional income tax if either of you personally hit the high-rate tax bracket.

Your wife doesn't have to be contributing to the business at all to be a legitiimate shareholder and take dividends, and shares can be freely transfered between husband and wife.

Deep Singh

Gary, can you simplify this for a simple mind? Two scenarios, in both the company makes £50k profit and hus/wife have a 50/50 split in company

1) Husband already a higher rate tax payer because of other income but wife not

2) Husband and wife both already higher rate tax payers due to other individual income

In both cases what tax to be paid on the £50k?

Many thanks

logiclee

Only one income but manage around £1700 a month spare after essential bills.
Currently overpaying mortgage by £1000 a month which leaves £700 spare.
Probably spend about £300 of that on things we really dont need and on services we could really do ourselves like Gardeners etc.

Cheers
Lee

GCollier

Scenario 1 - £50k profit, £10k paid by company in small companies corp tax (assuming 20% rate), husband and wife each take £20k net dividend. When husband files tax return he pays £5k additional tax on his dividend because of high rate tax. Wife pays no further tax on the dividend unless it has pushed her over the high rate tax threshold because it is considered tax paid at the basic rate.

Scenario 2 - same as (1) except both husband and wife pay an extra £5k tax when they file their tax returns.

As well as taking advantage of a partner's tax allowance in scenario 1, the other big advantage of paying dividends rather than salary is that they avoid NI contributions - both employees and employers. The latter is large (around 12% iirc) and uncapped. That's why a lot of contractors pay themselves a nominal salary of £8kish pa.

This is how things worked when I was a contractor anyway but it's been a number of years now.

Gary.

Deep Singh

[quote=GCollier;6715922]Scenario 1 - £50k profit, £10k paid by company in small companies corp tax (assuming 20% rate), husband and wife each take £20k net dividend. When husband files tax return he pays £5k additional tax on his dividend because of high rate tax. Wife pays no further tax on the dividend unless it has pushed her over the high rate tax threshold because it is considered tax paid at the basic rate.

Scenario 2 - same as (1) except both husband and wife pay an extra £5k tax when they file their tax returns.

As well as taking advantage of a partner's tax allowance in scenario 1, the other big advantage of paying dividends rather than salary is that they avoid NI contributions - both employees and employers. The latter is large (around 12% iirc) and uncapped. That's why a lot of contractors pay themselves a nominal salary of £8kish pa.

Gary, quote


Thanks. So if both of us are already higher rate tax payers (due to other income, I am both self employed and employed and my wife employed) then we would pay £20k tax on £50k profit ie 40% so no real advantage.

The only advantage would be if I could give shares to someone who is a lower rate tax payer eg my mother. But there is no way hmrc will accept a large share being given away to someone doing the 'admin' side of my private practice.

Many thanks

.

GCollier

I don't think the 'admin' work comes into it at all. Shareholding is different from being employed and doesn't need to be justified by doing work for the company. If the intent was to look after your mother and provide an income for her then you're probably ok. But have the dividends paid back to you in brown envelopes, and of course then you've crossed the line from tax avoidance to evasion.

Deep Singh

Thanks for clearing that up Gary. I think I need to have an urgent chat with my accountant about setting up a company. I would never 'evade' as its not worth the risk to my job. But there's no reason why my mum can't stash it away and leave it to me in her will ( as long as it stays under the inheritance tax threshold)

KiwiGTI

i would be hesitant to start giving large sums to other family members, the whole case against Arctic Systems is defended on the fact that a husband and wife are a partnership.

This clearly doesn't apply in your case.

corradoboy

Whilst I still have a mortgage I have NO disposable income.

Fuzz

Agree..
Whilst I have debt (in the form of credit cards) every single penny goes to pay it back ASAP.
Only occasionally do I dip into my wages to either go out or buy some materialistic crap I don't really need... but makes me feel better.


Andy

Deep Singh

Thats what I thought but Gary reckons it doesn't matter what the shareholder does for the company as they are not an employee. So what is the deal?

GCollier

I asked my accountant about this very issue. The advice I was given that one off transfers of shares to family members would be ok, but that numbers of transfers back and forth would probably be investigated. In the end I just kept the shareholding to myself and my partner. This was all several years ago, so it would probably be wise to get up to date advice before acting on this.

Gary.