Self Employed Advice

Discussion in 'Tax' started by yfaykya, Sep 14, 2017.

  1. yfaykya

    yfaykya New Member

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    Hi all,
    Apologies if this is in wrong forum.

    I have been offered a contract position with an English company. I was wondering what are legit expenses etc I can deduct and how do I pay for a pension in a tax savy way? In the main I will be working from my home office. I am trying to weigh up the total cost of being self employed vs PAYE (employer PRSI, Pension, health etc).

    Thanks!
     
  2. Taxpert

    Taxpert Registered User

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    If you are employed you get the paye tax credit (€1630?). If self - emp you only get the s/e tax credit - can't quite recall what it is €900?

    If employed you can claim civil service mileage rates - you can't as self employed. If s/e you claim the actual proportion of expenses incurred. So if you do 2,000 business miles out of a total of 20,000 then you claim 10% of everything. Depreciation depends on type of car. - the greener the greater.

    On balance employed is better I think where travel is concerned ( civil servants don't come second best in a contest like this.........who writes the rules?).

    You can deduct any expenses incurred which are bona fide expense for the business. This would include a fair apportionment of heat, light etc for home office. Technically you could claim a proportion of your mortgage, but be very careful here. If you claim any of the mortgage then the house is partly a business premises, and when you come to sell you cannot describe it all as your residence, thus leaving yourself open to CGT on the sale of the house. If your renting however you could claim a portion of the rent.

    Pensions are specialist. But you can contribute a % of your earnings either way, depending on age.
     
  3. yfaykya

    yfaykya New Member

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    Thanks for response!
    Does anyone know if I can pay rent to myself under the rent a room scheme?
     
  4. T McGibney

    T McGibney Frequent Poster

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    Significant doubts arising from various Revenue pronouncements surround the possibility in individual cases for company directors to claim tax-free travel expenses. You'll need specific professional advice to address this properly.

    I'd have serious reservations about all of this, except the first sentence.
     
    RedOnion likes this.
  5. Taxpert

    Taxpert Registered User

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    The poster asked about employee vs self-employed for a contract. The issue of being a director is outside the scope of the question.

    As for your comments about having serious reservations, could you elaborate? Are you suggesting that one can't expense a reasonable proportion of light and heat etc for home working?
     
  6. RedOnion

    RedOnion Frequent Poster

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    I read the OP as being a question between being an employee of the UK company or contractor via their own Ltd company.

    Yes, it's possible to contract as a sole trader, which you appear to have picked up, but it's unusual, especially where you only have 1 client, and I'd question why anyone would choose that route.

    Having a Ltd company opens up additional pension opportunities.
     
  7. Taxpert

    Taxpert Registered User

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    Well the contacting company may not wish to have the person on the payroll ( employee rights and all that). But revenue would prefer that, and argue for it!

    And yes, a Ltd co does open up other opportunities, but there's a lot of hassle with a co, and if this is a once off contract, or the turnover is going to be low (say < €50k) I'd wonder about the advisability of that route. Under these circumstances I would advise against it.
     
  8. RedOnion

    RedOnion Frequent Poster

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    Having been on the other side, and taking on contractors, I would be very slow to take on someone who wanted to contract without a Ltd company. It's too difficult to prove they're not an employee, and it costs in the long run if Revenue decide against you and you end up paying fines.

    For anything <50k, given the option of being an employee, you'd be mad to do anything else.
     
    T McGibney likes this.
  9. T McGibney

    T McGibney Frequent Poster

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    Last edited: Sep 18, 2017 at 10:51 AM
    I'd have serious reservations about the piece I quoted, in part as it's potentially misleading and in further part as it's factually wrong.
     
    Last edited: Sep 18, 2017 at 10:51 AM
  10. Taxpert

    Taxpert Registered User

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    Could you be specific about how it is factually incorrect?
     
  11. T McGibney

    T McGibney Frequent Poster

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    Where would one start? Suffice to say the point about claiming mortgage payments as a deduction against income tax is so far off the scale to beggar belief.

    And the entire question is too complex to address in a paragraph or two.
     
  12. Taxpert

    Taxpert Registered User

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    Last edited: Sep 19, 2017 at 11:11 PM
    If the mortgage interest payments are wholly and exclusively incurred in the furtherance of the business, then they are allowable, according to the Taxes Consolidation Act, 1997.

    Likewise if the capital repayments are wholly and exclusively incurred in the furtherance of the business, they too are allowable under the capital allowances regime.

    But as I said, it may not be wise to claim them for reasons provided.

    You ask where would you start. You could start by giving specifics, rather than vague generalities.

    And, yes, the question is complex. But the answers are given as a general guidance, in accordance with TCA 1997.

    So if you can refute anything stated, specifically, other than with vague generalities, I invite you to do so.

    And should your contribution be in accordance X with TCA (1997) I will happily acknowledge your superior knowledge.
     
    Last edited: Sep 19, 2017 at 11:11 PM