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Original poster

HELP! Been registered as a Limited Company by my Agency....

26 replies

Toothache · 15/07/2005 13:16

I start a new job on 8th August through an Agency.
They have sent me the formal offer showing my Daily rate of pay. I noticed it said £* ltd per day.

I phoned the Agency and they told me that I have been registered as a PLC because it's more tax efficient. This means I pay myself a wage and pay the rest as business profits (therefore only pay Corporate tax.... I think).

They have registered my through a company called Brooklyns who apparently deal with it all for me.

Does anyone know anything about all this??? It's really confusing me! And how much money is likely to save me????

HELP??? I don't want to seem like a numpty to my Agency.

OP posts:
jampots · 15/07/2005 13:17

if you've been registered as a limited company then you would have to sign the directorship documents and it has a whole set of responsibilities in itself. Surely they cant do this without discussing it with you?

Original poster
Toothache · 15/07/2005 13:19

Apparently the forms are in the post! I'm scared.... could I end up losing out???

OP posts:
HJ · 15/07/2005 13:20

I'm a limited company, and you have to pay for an accountant - if Brooklyns do it all for you they will want to be paid!

jampots · 15/07/2005 13:20

speak to a small business advisor quickly or your bank's small business department

Original poster
Toothache · 15/07/2005 13:21

HJ - Yes they deal with the Accounts etc. I'm sure if I remember it's something 2% fee. I'm wondering how much tax this will realistically save me?

OP posts:
Original poster
Toothache · 15/07/2005 13:21

Apparently this is the 'done thing' in my industry!

OP posts:
okapi · 15/07/2005 13:33

Is teh company Brooksons? link here

AuntyQuated · 15/07/2005 13:37

what industry is it toothache?
the IT industry is subject to IR35...which means you can't take out profit or dividend veryhting has to be taken out as salary which means you don't benefit at all
iirc you may be worse off as you have to pay NI twice...once as the employer and again as the employee

lemonice · 15/07/2005 13:42

I am a limited company or strictly speaking we, but only I do any related work..but I thought the advantages over self employment had been largely ironed out now...you have to file company accounts at Companies House and there are various legal obligations but nothing too onerous unless you are earning millions.

But you have to sign the papers so they can't register the company without you doing that.

QueenOfQuotes · 15/07/2005 13:46

DH was the one that registered us as a Private Limited Company, don't know what the difference is though as he does all that.

He had to have a company secretary (the company we reigstered through acts as ours) and he also had to sign all the papers too.

SenoraPostrophe · 15/07/2005 13:51

the benefits are severely limited because you have to wait until the end of the year in order to take out profits. if you can afford to do that, fine, you'll save the difference between 20% and your normal tax/NI rate.

However by not being an employee you will lose holiday pay, sick pay and job security.

Not worth it IMO, and they should have asked you first.

MumsRCool · 15/07/2005 14:57

The reason that they register you like this as it means less admin on their part. If you go PAYE then they need to pay for the man hours to do your payroll plus P60 and eventually P45. As a LTd company they don't have to do any of this. Also, you should be sending them a weekly invoice if you are Ltd detailing your hours and rate. Basically all of the benefit is with the Agency and there is little benefit for you (unless earning loads and then you may have to start paying VAT), just more paperwork. IT agencies, especially the smaller ones can be real "cowboys" and very money driven with little thought for the candidate after the placement has been made. You do have the right to say no, you want to paid PAYE and there is very little that they can do about it, regardless of what they say. This is just a cost management exercise on their part.

WideWebWitch · 15/07/2005 15:03

Vey bad practice and unprofessional to do this without asking you toothache, I agree with mumsrcool. Out of order, I'd say you want to be paid paye if I were you.

MumsRCool · 15/07/2005 15:07

I've found a PAYE vs Ltd company calculator on a site used by Australasians when they first get here. It will tell you how much better off you are if you go Ltd but don't forget to take into account your accounting fees. 1st Contact

SenoraPostrophe · 15/07/2005 17:27

that site seems to assume you will take only the personal allowance through the year, and profit at the end. Only the very rich can afford to do that. You can of course fiddle it by taking lots of loans from your company, but IR don't like that.

As for "your agency may pay you the employers NI they would have paid" - yes, right.

I think it's a bit of a scam too .

Original poster
Toothache · 16/07/2005 20:40

Thanks for your input here guys.

Yes the company is Brooksons. The industry I'm working in is Engineering. I've spoken to a few other Planning Engineers that are through Brooksons and they seem to think it's a wonderful tax dodge!!! I will be earning £160 per day. The agency said this would drop to £150 a day if I went PAYE.... but from what people have said here I may as well do that. I'm really nervous about it all and know not much about it. I remember when I was earning £90 per day I looked into going ltd and I thought it would save me about £50 per month in income tax so didn't bother. But with the increase in salary I really thought it would be for the best. Will speak to the Agency on Monday and clarify everything. Thanks again folks.

OP posts:
Original poster
Toothache · 19/07/2005 11:48

Hello folks. I got all the paperwork through from Brooksons today and I'm looking really hard for the catch but can't see it!!

They are saving me about £4k a year in income tax..... but whats in it for them??? I don't see anything about a fee or a percentage going to them. Hmmmmmmm...... >suspicious

OP posts:
JulieF · 20/07/2005 16:23

What's in it for them is they don't have to pay employers national insurance contributions, sick or holiday pay.

northerner · 20/07/2005 16:32

I think you mean what's in in for Brooksons - not your employers - am I right?

My dh was a ltd company up utill recently and tbh we found it an absolute nightmare. However, we were badly advised at the outset. We needed an accountant to set up a pay roll to pay dh, to draw up accounts and submit reports to companies house, it was costing alot in accountnts fees, and we had to complete quarterly VAT returns, and pay VAT.

Make sure you get good advice and understand all of the implications.

Who is paying Brooksons then - you or your employer? Cause they won't be doing this for free.

northerner · 20/07/2005 16:32

And yes - you will be liable for corporation tax.

Ladymuck · 20/07/2005 21:16

We have a bunch of Australians working with us at present - I guess their average day rate is about £300. They are all set up as ltd companies and their agency seems fairly familiar with the scheme (though in this case the agency did not set them up - one of the Australians had already been set up that way, was very happy with his 22% effective tax rate and brought the others in on the scheme).

okapi · 20/07/2005 21:55

Info about fees from the link I gave on Friday:

Q. How much will it cost?
A. Brookson manage all of your limited company administrative obligations and send your net income to you by same day transfer for a highly competitive fee of £19 - £29 per week, charged to your composite company.
The fee is determined by your gross weekly income as follows:
Weekly income level Weekly fee level
Weekly income level
Weekly fee level
Up to £499

£19
£500 to £749
£21
£750 to £999
£23
£1,000 to £1,249
£24
£1,250 to £1,499
£25
£1,500 to £1,749
£27
£1,750 and above
£29

There is a 1.25% charge for the administration of expense claims and a small administration charge for any non-standard remittances of all or part of weekly net earnings, for example, payments requested by cheque or where earnings have been attached by a court order.
There is no charge when you are on holiday or between contracts - a problem for composite company providers who charge by the month.

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Original poster
Toothache · 21/07/2005 08:04

Thanks SO much everyone!

I found the part where it tells me what I pay. I will be paying them £23 per week for their service. PHEW, feel much better about it all now. I don't need to get an accountant as they handle all that as part of the fee.

Looks like I'm "Toothache Ltd"!!!

OP posts:
Mytwopenceworth · 21/07/2005 08:15

if i am understanding the arrangement correctly then it also means youve not no rights under employment law doesnt it?- no unfair dismissal, no maternaty pay no sick pay no paid holiday, contribution to pension scheme, paid training days etc etc? they dont pay employers ni and finally they can just phone you up and say youre not needed any more, bye and you can do jack about it.
factor in your lost 4 weeks paid holiday, the missing ni payments, the fact that if you are ill you get squat (supposing you are ill for several weeks? no pay of any kind?)etc etc, plus the fact you've effectively got no security or rights and you'll find that this is done cos it saves THEM money and hassle!

Original poster
Toothache · 21/07/2005 08:43

MTW - Its the same with any agency work though. I've worked as a Contractor since 2000. My holiday pay was paid to me as a percentage of my hourly rate.... so in theory you are supposed to put a certain amount away each week to cover holidays (is anyone that organised?).

And at no time as an Agency worker was I ever entitled to sick pay. HOWEVER, I did get SMP, which I wasn't expecting.

Won't be going down that road again for a wee while though.....

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