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PPRuNe Knight in Shining Armour
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Join Date: Feb 2000
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I’ve have a dilemma.
I’m starting part-time instructing (UK) soon and the flying club that I’m going to be working for would prefer that I was a limited company and was able to invoice them for my time.
Are there any of you out there in the same position? I’d like the benefit of your experience, any pit-falls, is there another way to do this?
I’m starting part-time instructing (UK) soon and the flying club that I’m going to be working for would prefer that I was a limited company and was able to invoice them for my time.
Are there any of you out there in the same position? I’d like the benefit of your experience, any pit-falls, is there another way to do this?
Join Date: Apr 2002
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Snigs,
I haven't worked as a flying instructor, but I was a one person limited company for some years. (I was a management consultant).
The advantages of a limited company are that you can pay yourself a very small salary (say £1,000), thereby minimising your PAYE liability. You then pay yourself the balance of your earnings in the form of company dividend, which is taxed at a lower rate. Thus, you can keep your tax liabilities quite small. You can also pay yourself reasonable expenses, which are not taxed. You must, however, keep good book records and prepare annual accounts for the Inland Revenue. The arrangement also has implications for National Health contributions.
The problem arises if you only have one 'customer' as appears to be your likely position. In this case, the Inland Revenue will definitely deem you to be in reality an employee and force the flying club to engage you as an employee and pay you a salary.
Thus, the wheeze of making you set up a limited company will only work if you actually do work for MORE THAN ONE club. I wonder if they realise this?
Remember also that being a limited company also has insurance implications. If you have an 'industrial' accident during the course of your work and you are incapacitated, who pays? Will the club sue you if your student is hurt in an accident?
Tread carefully, Snigs!
Very best of good luck,
BroomstickPilot.
I haven't worked as a flying instructor, but I was a one person limited company for some years. (I was a management consultant).
The advantages of a limited company are that you can pay yourself a very small salary (say £1,000), thereby minimising your PAYE liability. You then pay yourself the balance of your earnings in the form of company dividend, which is taxed at a lower rate. Thus, you can keep your tax liabilities quite small. You can also pay yourself reasonable expenses, which are not taxed. You must, however, keep good book records and prepare annual accounts for the Inland Revenue. The arrangement also has implications for National Health contributions.
The problem arises if you only have one 'customer' as appears to be your likely position. In this case, the Inland Revenue will definitely deem you to be in reality an employee and force the flying club to engage you as an employee and pay you a salary.
Thus, the wheeze of making you set up a limited company will only work if you actually do work for MORE THAN ONE club. I wonder if they realise this?
Remember also that being a limited company also has insurance implications. If you have an 'industrial' accident during the course of your work and you are incapacitated, who pays? Will the club sue you if your student is hurt in an accident?
Tread carefully, Snigs!
Very best of good luck,
BroomstickPilot.
Join Date: Nov 1999
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You no not have to become a Limited company.
There are plenty other ways you can do it. True the IR don't like FIs being self employed with only one customer! I started instructing in the same way you are and I was self employed. Don't worry about the IR unless they approach you about it but you could get other customers by flying with a current PPL out of working hours doing a chaeck ride or something. Your flying school could get nasty but remind them that you are not an employee and that you have other customers. But do it tackfully. If they realy don't like it explain the situation and ask for a employed position.
Instead of being a limited company (which I believe there must be a minimum of two directors) become a sole trader. You don't need to register any where other than informing the IR so you can get a tax return, keep records of all flying undertaken, bills and costs.
Good luck e mail me if you need any more info
There are plenty other ways you can do it. True the IR don't like FIs being self employed with only one customer! I started instructing in the same way you are and I was self employed. Don't worry about the IR unless they approach you about it but you could get other customers by flying with a current PPL out of working hours doing a chaeck ride or something. Your flying school could get nasty but remind them that you are not an employee and that you have other customers. But do it tackfully. If they realy don't like it explain the situation and ask for a employed position.
Instead of being a limited company (which I believe there must be a minimum of two directors) become a sole trader. You don't need to register any where other than informing the IR so you can get a tax return, keep records of all flying undertaken, bills and costs.
Good luck e mail me if you need any more info
