Q. My wife has been offered a freelance advertising contract, with the stipulation that she engages them via Ltd Company. We would not need my wife’s earnings to live off. If she was deemed to be inside IR35, is it feasible for her to draw zero (or minimum) salary and for the income to be retained as company profit – or would she be obligated to draw out all income and be taxed PAYE/NI?
A. The income is automatically treated as salary & HMRC will want the company to pay over the relevant PAYE tax & NIC. Whether or not the wife draws this salary is up to her, as she could opt to have the net salary credited to her director’s loan account to be drawn on in the future. She will however be personally taxed on the deemed payment which will be reported on her SATR.
If the contract is ‘freelance’ then how can it possibly be deemed inside IR35?
People need to be more assertive about the status they want to be rather than just be told it.
The engager is already helping by insisting a ltd company is involved (bonus – no agency!). You aren’t going to get employee benefits either way, so just invoice them for work done as a genuine freelancer and deal with your PAYE within your company however you see fit.