Due to recent IR35 legislation you may have found your invoices now have tax and national insurance deducted prior to you receiving payment.

There is a couple of important distinctions here:

Invoice through PAYE or Umbrella

You may have actually received money as an employee via PAYE or an umbrella contract. This is common if you are deemed to be inside IR35 (effectively an employee). This income should not actually be paid into the limited company as this is personal income and if you do receive this into your company you should record as "money business owes to director". You can then reimburse these funds using the same category.

We would suggest under this scenario to arrange with your employer to make payments to you personally.

Invoice as a limited company

You have been deemed as inside IR35 by the third party, but they are continuing to pay the limited company rather then you as an individual. Under this scenario it is correct for you to receive funds into the limited company however the limited company is effectively just a vessel for payment. Please get in touch with us if you are under such an agreement as we will need to make adjustments for you to ensure you do not also pay Corporation Tax on this income.

If you are unsure what situation applies to you, you should confirm with the third party if you are being invoiced as a limited company or if you are under PAYE or Umbrella and follow the steps described above.

Generally speaking if you are being invoiced through a limited company, it is often more beneficial to have this paid to you via PAYE or Umbrella assuming this is an option available to you. You will need to discuss this with the third party in more detail.

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