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Putting your spouse short term contract through your Ltd Company

Thursday 14th November 2013

So you are a freelance contractor working through your own Limited Company and your spouse has just been offered a short term contract, would it make sense to put this through your company?

It depends.

It mainly depends on how long your spouse might end up contracting for and how much income this will bring into the company. If it was only three or so months and the income was say £30K then it would usually be perfectly fine to operate the contract through your company.

However if they might end up contracting for a year and there fee income during the year is say £100k added to your fee income of say £100k and your company will end up breaching the threshold for staying on the VAT Flat Rate Scheme.

This means you will have to leave the scheme and will loose out on the £12k of possible extra income.

How do you plan so this does not happen?

With the relatively small costs involved in setting up a new Limited Company and the yearly accountancy fees being less than £1k it makes sense for you both to have your own companies, each registered for the VAT Flat Rate Scheme and each receiving additional income of say £6k a year through the scheme.

In situations like this planning is a key element to maximising your income - you need to think about how long you wish to contract for and what the likely hood is that your initial short three month contract will be extended for say another six month or longer.


If you have any questions please get in touch.

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