How does a Spirit composite company work?
You become an employee and shareholder of the company. As an employee you are paid a basic salary, which is at least the national minimum wage plus any allowable tax-free expenses. The remaining income arising from your contract, if you can satisfy the IR35 requirements, is paid out to you by way of dividend after the deduction of our service charge and any corporation tax arising. If you are caught by IR35 then all your income is treated as a salary and taxed according to the IR35 rules. This is still beneficial compared to being on your agency’s or client’s payroll but not as tax effective.
