LTD v PAYE

[ric]

Not an employment law issue as such but I didn't know where else to put it.

If a job advertises it's hourly pay rate as "£8 an hour PAYE or £10 an hour Ltd" what does this mean and what is the difference and why would you get paid more for being LTD rather than PAYE?

[Mineral1]

Re: LTD v PAYE

Difference being PAYE employer has to play with HMRC and their lovely contributions system and pay your NI and Tax whereas if your self employed you get the job (class 4 NI etc )

[ric]

Re: LTD v PAYE

Oh right so LTD means self employed meaning that I would have to pay my own tax etc. Thanks, that would make sense.

[wales01man]

Re: LTD v PAYE

Do you mean payment through a LTD company

[ric]

Re: LTD v PAYE

Dunno. The ad just says £8 an hour PAYE or £10 an hour LTD. I think mineral has it right though. It just means that you pay your own tax etc.

[Mineral1]

Re: LTD v PAYE

It's sort of slang for Employed/Self Employed and the differential is about right

[wales01man]

Re: LTD v PAYE

There is a big difference between
1, PAYE
2, Self employed
3, Ltd which may mean you are a Ltd company being paid £10 per hour for services the OP needs to be clear what he wants to be employed as

[FlamingParrot]

Re: LTD v PAYE

Oh right so LTD means self employed meaning that I would have to pay my own tax etc. Thanks, that would make sense.

It's sort of slang for Employed/Self Employed and the differential is about right

LTD means you have your own limited company which is not at all the same as being self-employed. You still have to pay your own tax but you'd be an employee of your limited company so you'd have to do a tax return for the company and pay corporation tax on profit as well as doing a separate tax return for you as a director. You can pay yourself a salary up to your personal allowance and not pay taxes as an individual, only pay corporation tax, or pay yourself more and pay taxes on both accounts, bearing in mind your salary would be a company expense that would decrease your gross profit and thus your corporation tax liability. If your company reports a profit, you can also pay yourself a dividend from that profit.

Company directors are not self-employed for the purposes of HMRC taxation, I've been one for years and never registered as self-employed. :nerd:

[FlamingParrot]

Re: LTD v PAYE

Dunno. The ad just says £8 an hour PAYE or £10 an hour LTD. I think mineral has it right though. It just means that you pay your own tax etc.

It's not just about tax but also NI contributions. When you work as PAYE your employer not only withholds NI contributions from your pay, they also pay employers NI contributions. The rate is 13.8% on every pound you earn above £7,488. This also counts as a tax deductible expense for the business.

Employees NI rates are as follows:

• First £7,605: 0%
• Next £34,870: 12%
• Over £42,475: 2%

[nemesis45]

Re: LTD v PAYE

All done so that the employer is not seen to be funding via the " black economy".

[FlamingParrot]

Re: LTD v PAYE

There is a big difference between
1, PAYE
2, Self employed
3, Ltd which may mean you are a Ltd company being paid £10 per hour for services the OP needs to be clear what he wants to be employed as

Unless the OP has a limited company or intends to set one up, this wouldn't be an option. There are tax advantages with a limited company but I'd say at these rates of pay, it's hardly worth the trouble of using a company, certainly not worth setting one up for the purpose.

[wales01man]

Re: LTD v PAYE

Just my interpretation of being employed as LTD was