LLPs and Salaried Partners
I have a client who is currently working via a managed service company, earning salary and dividend and claiming various expenses related to the jobs he undertakes. He works in a fairly specialised role for several client companies and his "jobs" can last anything from a couple of days to a couple of years, often running concurrently with each other. He is looking at his options in April when HMRC bring in the new MSC legislation. He has already decided that incorporating his own Ltd Co is an absolute last resort as he does not want the hassle or responsibility of being a director and having to oversee most of his own admin. His expected income based on last year will be borderline higher rate as well, just to complicate things!
He has been offered the option to join an LLP, where he will be paid via a combination of salary (they have said he will be a salaried partner and that his salary will be a minimum-wage level one) and profit-share on the balance of his gross weekly income, and has asked me for my opinion of the impact of such a scheme on his take-home pay. The advantage of this over continuing with his MSC is that he will still be able to claim the majority of his work-related expenses including mileage to his various projects.
I have told him I haven't a clue! But will do some research on his behalf and present him with some hopefully unbiased information. The first thing that appears to have come up is whether or not he can actually be a "salaried" partner and have profit share as well, it appears that he has to be one or the other.
The next thing is that assuming that this is the case and that as a salaried partner he will have to fund the partnership's employers NI on his wage out of his gross income, I feel that he would actually be marginally better off being taxed on his profit share anyway.
Your opinions and comments would be much appreciated, as I am groping in the dark here!
- Increasing the personal allowance: A top priority? 475 18
- Double tax treaty Italy and UK 96 1
- Anyone Heard of This Outfit? 1,103 7
- Bereavment payment 84 1
- Can anyone advise on the best VAT Scheme to change to? 273 4
- Apologies for reposting this but first post was on Friday afternoon! 343 2
- CT600 Computations - Company Tax Return help 1,294 14
- Sage Bank Reconciliation 146 2
- Companies House incorporation service 348 12
- Factors affecting tax charge FRS 19 (marginal rate) 75 1
- P35 and Service Company questions 149 3
- VAT chargeable to conference attendees 193 6
- Is Accountancy Becoming like an Insurance Policy 203 1
- Long period of account for Corporation Tax 266 7
- Flat Rate VAT and EU sales (Non VAT) 143 3
- NIC £2000 Allowance - Care Support Worker 152 3
- VAT, vans, sole traders and business use. 1,598 12
- Share Capital 131 2
- Trading income or not? 197 1
- Charge HMRC 424 3
- Xtuple 549
- Qtac payroll for bureau 376
- Confused - Professional Association a Mutual trader, or not? 317
- Industrial & Provident Societies 314
- Why would HMRC offer to close an investigation by contract settlement 291
- CIS schemes 223
- Domain name sale and limited company 205
- Investment 186
- Director legal fees in loose connection to the company 185
- Italian friend wants to set up a UK company to reduce taxes 178