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Where Taxpayers and Advisers Meet

PAYE higher rate tax payer and limited company?

Joined:Tue Nov 02, 2021 3:59 pm
PAYE higher rate tax payer and limited company?

Postby swalsh » Tue Nov 02, 2021 4:04 pm

All, I have worked as a higher rate PAYE employee for the last 10 years. I have recently stopped working and I have been offered some part time business development consultancy work outside IR35. It is likely to pay me £1000 - £2500 a month for probably 6 months with low amount of expenses (it could last longer than 6 months). I am also looking for a new full time job (which may be inside or outside IR35), but I will hopefully continue to be a higher rate tax earner still through my full time work. If I plan to find higher rate tax work as my main job, my questions are:

1) Is it still more tax efficient for me to set up a limited company for the part time business development consultancy work?
2) If I have exceeded my personal tax allowance already through my full time job is it it most tax efficient to only pay myself dividends in the Limited company? If so, why is this if above the £2k tax free dividend I will pay 19% corporation tax and 32.5% dividend tax (51.5% compared to 40% PAYE)?
3) If I am better off not paying myself a salary from the ltd company, is there any advantage/disadvantage to signing myself up to be paid PAYE through the company? Will it just give me extra flexibility if needed for no cost?


Joined:Sat Feb 01, 2014 3:26 pm

Re: PAYE higher rate tax payer and limited company?

Postby bd6759 » Thu Nov 04, 2021 9:03 am

I think you need to discuss this with a tax advisor, not least to sort out the IR35 position. If you are offered a role with a single customer it is likely to be within IR35.

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