Becoming self-employed / director of Ltd company need advice on tax and n.i. (UK)?

Hi there,





I am currently setting up a VSC (Virtual Service Company), where I will be payed monthly by my client.





I want establish a spreadsheet in Excel which will work out my monthly N.I %26amp; Tax contributions for me, so that I can set them aside before the annual assessment or whatever. Can anyone explain this fore me?





I am very new to this so would appreciate polite and informative answers. Thank you!Becoming self-employed / director of Ltd company need advice on tax and n.i. (UK)?
Your first port of call would be Inland Revenue for all the latest information and law regarding directors and employees tax %26amp; NI where a limited company is concerned including corporation tax. These are very strict and constantly changing.





As for an Excel spread sheet you could look on the MS site at some templates, they may help, or you may be able to modify one. Also IR may have such a thing on their web site. An Internet search may also help.


Can't tell you how to do it though as I did not work that way when I had a limited company.





Heres the link to MS online templates.





http://office.microsoft.com/en-us/templa鈥?/a>





Hope this helps some way.Becoming self-employed / director of Ltd company need advice on tax and n.i. (UK)?
Contact your Local Business Link (assuming you are in the UK) they run loads of really useful courses and will give you a buiness metor to help point you in the right direction.
I have a send sheet for self employed or employed. I'll let you have it free of charge. Send me an e mail via info@johndonnelly.co.uk and i'll send you a copy.
you need to talk to an accountant.





There is a little rule called IR 35, ';Service companies';


http://www.hmrc.gov.uk/ir35/ (google IR 35 for more)


it says even though you register as a company, if you look like an employed person, you will be taxed as an employed person. I.e. you cannot avoid tax and/or get tax breaks a company would get by hiding your effective 1:1 employment.





Your ';company'; needs to be seen to be offering general services to all, and be accepting ';tasks'; not offering continuous work to one or more


i.e two tests


- what is the difference between what you are offering what you are intending and the client just employing you on a part time basis to do work ?


- can and are you able to , supply anyone else in your place to do the work if need be.. i.e. it is the service not the person being supplied.





go find a reasonably large local accountant company.... who can advise you until you work out which smaller accountant may be more suitable for your type of business.





for small levels of trading (less than 68000 a year Turnover) you dont need to register for VAT, above that you must, but can go Flat rate.. making it simpler.





As a small company owner, you can be


- sole trader


- Ltd company (and pay yourself a small salary below NI level, and take the rest in shares)





You need to look at what type of services you are offering.





there is some guidance in the HMRC wesite and the buisness link website... it is there but there is a lot and can becoem overwhelming !! hence someone with experience (accountant) make life easier and cost effective to give you the essense that you need.


The 1st consultancy with an accountant is free, so you can assess if you are happy with the person/the company. no obligation..








one thing you will find quickly is that the HMRC VAt/tax, companies house etc etc are all very helpful in guiding you through many of the issues.





HMRC starting a business


http://www.hmrc.gov.uk/startingup/





business link:


http://www.businesslink.gov.uk/bdotg/act鈥?/a>











You also need to open a business bank account..


Several people do Free into packs


(Lloyds TSB does an nice intro CD with theirs and example S/w to do your books etc)


Abbey Buisness is free for life...


many are free for the first year


if you keep you transactions electronic (bank to bank transfer and cash card, then it will keep the transaction costs 0)
The first thing you need to know is that being self-employed is totally different to being a company director, and the system for pay etc is different. So you need to clarify which you are.





As a self-employed person you are taxed on the entire takings of your business. But you can deduct any business expenses, such as utilities, cost of stock, travel etc.





As a company director you are an employee and will pay tax and NI as you go via PAYE.





As a company shareholder you may receive dividends (distribution of profit) from the company. These are taxed slightly differently to employment earnings and no NI is payable.





Often directors are also shareholders so they can choose either or both of these two methods of payment. There is no simple answer to which is best - it depends on your exact circumstances. But a limited company itself is liable for corporation tax on its profits. As with a self-employed person all the business expenses are deductable, including employee salaries. But the profit is taxed before any dividend is distributed.





Individuals (not companies) get a tax free personal allowance of 拢6475 per year and tax is only paid on the earnings above this. The next 拢37,400 is taxed at 20% and everthing else is taxed at 40% (rates for dividends are slightly lower). It would be very difficult to come up with a simple spreadsheet to calculate likely tax and NI because it will be difficult to assess the expenses to be deducted.