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Advise for a upcoming short-term contract(potentially longterm)

Discussion in 'General Forum' started by Jai, Aug 30, 2018.

  1. Jai

    Jai New Member


    I was wondering if someone can advise please.

    My situation is that I am a full time employed with a large company earning an amount of £47000.

    I have been looking for additional work and currently have a contract for 9 week duration with the total worth of £8550.

    I am required to make a decision wether to open up a limited company or go down the umbrella route. I understand if I go through a limited company it is usually paper intensive and recommended for the long run, however, I don't know if I will get more contract such as 9 week contract or my current contract extended after the 9 week duration.

    Going down the umbrella route means that I will have to pay higher rate tax, which I wish to avoid.

    I still somehow think limited company route might be a better option - If I don't get any further contracts then I assume it is just making a company dormant and file returns with the company house.

    Ultimately my main aim is to maximise the return on the £8550 without being over paying tax. I am seeing a local accountant in London next monday and wanted to find out as much information here I could before so I could ask him the correct question.

    I am also happy to include another person (my ex if it makes a difference!) as a shareholder or an employee of the company if it helps? I also don't have a need to withdraw the money straighaway from the company and happy to leave it there so I don't have to pay tax on my income, if this helps?

    I also understand there are corporation tax to be paid on the profit on the company (turnover of £8550 less expenses). The expenses for the 9 week duration are I have mortgage bills to pay (I will be working from home monthly mortgage amount of £1300), electricity, gas, and also some travel which I can show on my monthly travel card which is £235 - Although the work is primarirly based from home I still have to travel to clients site.

    I have heard that if you have more shareholders in the company then each can take £2000 tax free - I didn't understand this completely.

    I would be grateful for any advise you can give me based on my above circumstances explained above! If you need any clarifications please let me know.

    Many thanks

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