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Evening,

Im currently employed working shifts, on my days off i work for myself as a sole trader, roughly 2-3 days a week. Every penny i earn self employed i get taxed 40%. It got me thinking, is it worth going LTD to avoid this?

To the people that are LTD whats you experience and what are the pros and cons?

To the people that have though about going LTD but didnt go through with it, why not?

Thanks

Woody
 
May be he's confusing the 20% tax and the 9% ni as all tax.

Best you book an appointment with an accountant as we are merely guessing
 
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As above, you need to consult an accountant who will look at your income and business model and like others have queried 40%??? Where do you get this figure from?
 
can you be limited and employed?
You are not limited. You are owning limited company where you can or cannot be employed.

@akwoody2 it all depends on personal circumstances e.g. whats your income from self employment, is there anyone from family that can be employed for tax strategy (your wife for example). Since they introduce tax on dividents from this year its got little bit complicated now. You can do some basics calcs yourself. Company have to pay 20% corporation tax from income then rest can be withdraw as salaries or dividents or combination of both. You can take £5000 dividents tax free so if you and your wife would own 50% of the company each you can take £5000 dividents each tax free. Rest would have to be taxed at 40%. So it may be worth doing it but as i said it all depends on circumstances...
 
40%? Must be earning a good penny employed if you're already in a 40% bracket.

Not doing to bad
May be he's confusing the 20% tax and the 9% ni as all tax.

Best you book an appointment with an accountant as we are merely guessing

No confusion, I earn over the £43k band. Employer has no issue with it, the only impact it has on them is the fact I do less overtime
 
You are not limited. You are owning limited company where you can or cannot be employed.

@akwoody2 it all depends on personal circumstances e.g. whats your income from self employment, is there anyone from family that can be employed for tax strategy (your wife for example). Since they introduce tax on dividents from this year its got little bit complicated now. You can do some basics calcs yourself. Company have to pay 20% corporation tax from income then rest can be withdraw as salaries or dividents or combination of both. You can take £5000 dividents tax free so if you and your wife would own 50% of the company each you can take £5000 dividents each tax free. Rest would have to be taxed at 40%. So it may be worth doing it but as i said it all depends on circumstances...

Im in the process of sitting down with an advisor, meeting is booked for after Christmas. I have read about the dividents and how my wife could be employed to help with the tax.

Has anyone made the transition from sole trader to LTD?
 
Im in the process of sitting down with an advisor, meeting is booked for after Christmas. I have read about the dividents and how my wife could be employed to help with the tax.

Has anyone made the transition from sole trader to LTD?


If your wife does not have any income then you company can employ her and do a salary of £8040 tax and ni free + £10000 dividents between both of you and this will gave you huge savings.
 
I take it you are already offsetting all you can against your earnings, you shouldn't be paying that much to be honest if you are buying tools, paying pli, mileage to jobs etc. You must be knackered!
 
I take it you are already offsetting all you can against your earnings, you shouldn't be paying that much to be honest if you are buying tools, paying pli, mileage to jobs etc. You must be knackered!

Im doing everything possible to keep the profit down to limit the tax but there's only so many tools i can buy before im wasting my money. Going LTD is something i have thought about doing, google can only tell you so much. Asking people that have done it is where you get the best information. I do 4 on 4 off 12hr days, whilst im working its alright, its when i stop is the tiredness kicks in!
 
I bet most people on here who are employed PAYE and also a have part time business are consistently paying more in tax than those who are fully self employed. I base this on being employed and PAYE for many years whilst my other half was self employed both as a sole trader and as the director of a Ltd company. The NHS or morals doesn't really come into it, otherwise we could start discussing why I don't get tax relief on my private medical insurance which costs me a fortune every month!
 
That's OK, and it's FOC, even better!
I bet most people on here who are employed PAYE and also a have part time business are consistently paying more in tax than those who are fully self employed. I base this on being employed and PAYE for many years whilst my other half was self employed both as a sole trader and as the director of a Ltd company. The NHS or morals doesn't really come into it, otherwise we could start discussing why I don't get tax relief on my private medical insurance which costs me a fortune every month!

Well put! I did want to reply with something similar but couldn't be bothered but I'm glad you could be. I do indeed pay a large amount through PAYE.
 

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