F.E.D and your own Ltd. Company

[Sunman]

Has anyone ever been able to claim F.E.D when they have been freelancing as an employee of there own Ltd. Company.

Was thinking of setting up a Ltd company as a mechanism to be paid through, do PAYE and pay my N.I then claim back my seafarers to get my tax back……. Sounds too easy? Anybody had any joy this way?

[ROV_Monkey]

Sunman,
I do know you can’t claim FED if you’re using an offshore company to funnel the money so would assume you’d need a UK LTD company. As a bare minimum you’d probably need (as I did) 5 million USD liability insurance which wasn’t cheap or easy to source – I ended up using LLoyds London. You’ll also need to pay employers as well as employee NI.
Why not just work agency, dayrate or salary direct…pay tax and NI, only work on vessels and claim your tax back via FED? Seems simpler and gives same benefit. By the time you’ve paid insurance and employer NI I don’t see much gain in using LTD….or am I missing something (probably not for the first time) 🙄

Cheers

Monkey

[rovnumpty]

Sunman

Take it FED is the seafarers tax break?

If it is, I wouldn’t be too hasty to take monkey’s advice.

UKPS has been playing fairly loose with what they call an employee and self-employed. Even if you are PAYE with them, they wont call you an employee. Means you can’t claim the seafarers tax break.

There a some of test cases going through just now. Hopefully, within six months, there should be some clarification as to whether or not PAYE means you are an employee or self-employed.

I certainly wont be rushing back to work agency till I find out the outcome.

[Savante]

I get major headaches with this. 👿

[Sunman]

So Monkey do you get your seafarers or are you non resident anyway?

When I say the FED (Foreign earnings deduction) I mean seafarers, Certainly I want to bypass the agency thing at the moment after all the hassle I’ve been reading on the other forums.

It certainly seems apparent that you can’t claim seafarers as a self employed and I would say paying a bit of NI would be a small price to pay for getting the rest of it back. As for insurance I have that sorted (third party cover through the company I that would be sub-contracting me).
It’s just the whole fact that you are the owner of the company that employs you…

Other option is to get paid offshore and not declare it at all, it just gets a bit of a pain when you want to make a big transaction i.e car/ house, where do say to the tax man the ££ came from.

[liddelljohn]

When i was in telecoms in UK I used UK LTD company set up as a subsidary of a foreign company run by NON UK nationals . I got away with paying min imal tax for 14 years using this dodge which was set up by an accountant.
Its is a grey area but my accountant told me its what big corporations do so the tax man has to go after them first .

Even when IR35 came in they could not touch me .
I have not worked in Uk for 6 years though .

[ROV_Monkey]

So Monkey do you get your seafarers or are you non resident anyway?

When I say the FED (Foreign earnings deduction) I mean seafarers, Certainly I want to bypass the agency thing at the moment after all the hassle I’ve been reading on the other forums.

It certainly seems apparent that you can’t claim seafarers as a self employed and I would say paying a bit of NI would be a small price to pay for getting the rest of it back. As for insurance I have that sorted (third party cover through the company I that would be sub-contracting me).
It’s just the whole fact that you are the owner of the company that employs you…

Other option is to get paid offshore and not declare it at all, it just gets a bit of a pain when you want to make a big transaction i.e car/ house, where do say to the tax man the ££ came from.

Hi Sunman,
I get the earnings deduction now and am UK resident, employed day rate direct for the company. When I had the offshore company (turks and caicos) I was classed as employee of the company, the fact that I owned the company was in effect hidden as the owner was the owner of the bearer bond. In the end I went agency owing to the high insurance costs to give me 5 million USD liability cover.
Having said that, as numpty points out, I’d stay clear of agencies at the minute until the UKPS tax situation is sorted out if I was aiming for the tax back.
I did get tax back whilst working through UKPS @ 12 years ago. So far I haven’t heard from the tax man about this yet, hopefully I wont 😯

Monkey

[Sunman]

So it looks like i’ve got somewhere with this if anyone is interested….
OK so in order to get my FED I have to pay my self PAYE and claim back the income tax, however to do this I will have to pay not only employee NI contributions but also employers NI contributions totaling 23% (with the income tax on top).
As you can’t generally claim back the employee’s NI and never the employers NI it actually looks better to pay the smallest salary as possible (in order to cover minimal NI contributions) and take the rest as company dividends taxed at 21% corporation tax.
So this looks to be the most efficient route so far. Obviously there are different rates of corporation tax around the world so the next step would be to look at setting up a company overseas with the benefits of lower rates as well as no employer NI contributions which could make the first option, with FED, a preferable option. At the moment though it looks like there really are two certainties in life, death and taxes…….

[Steve White]

Sunman, there are various options of how and where to get the greatest benefits of offshore. PM me if you would like some specific advice.

[Author]

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