[Crystal-clear]

Ok found this calculator here apparently if you go limited and you have a company the tax is ridiculously less put in 46000 example which is the lower rate limit and 0 salary or 10000 and 36000 and the tax is bloody £2500 as self emp were talking £11k. Is this correct or am I missing something.

https://www.which.co.uk/money/tax/income-tax/income-tax-on-savings-and-investments/dividend-tax-calculator-201819-arffw6n927yf

[mike1986]

I’m just about to go ltd. Account told me it makes no difference in terms of tax savings until your earning over the higher rate tax threshold

[Crystal-clear]

I’m just about to go ltd. Account told me it makes no difference in terms of tax savings until your earning over the higher rate tax threshold

On the contrary a friend of mine is limited and he received dividend payments I don't like praying into his personal life too much obviously but he does say he ends up paying about 10% tax I had a feeling something was wrong with his accountant but then I logged onto this calculator and it's in black and white look give yourself 0 salary or low salary and you end up paying that much tax on a dividend


There is also a £2,000 free non taxable dividend it used to be 5000

I hope some of some experience having a limited company will come on and clear things up

[Shrek]

I would be interested in this too

[Tom-01]

Don't forget the 19% corporation tax on profits BEFORE dividend payments. Whichever way its done the taxman gets their money.

[Crystal-clear]

Don't forget the 19% corporation tax on profits BEFORE dividend payments. Whichever way its done the taxman gets their money.

Of course corporation tax that's the equaliser obviously.
That said you pay yourself the tax exempt minimum and the 7.5% up to 46 with thr cop tax it does work out cheaper but yeah no way 10% will go back to my friend and ask him whats he on about

[Stoots]

The bottom line is there's very little difference.

I'm ltd as of this may, it's a matter of a few hundred quid difference (about 300) tax/n.i wise to sole trader at my turnover .

So whether you go ltd or not shouldn't be based purely on tax reasons.

But of course everyone should evaluate their own situation before deciding.

[Shrek]

Try working out 46k per year and you and your Mrs are directors on £11,850 per year plus dividends...

[Crystal-clear]

Try working out 46k per year and you and your Mrs are directors on £11,850 per year plus dividends...

What if your missus is already earning over 45000

[paul alan]

I'm limited, I now pay my accountant £180 per month instead of £30, so any tax savings are eaten up.


I do however now have a safety net for my home and car to be never taken off me should the unthinkable happen. If anything were to happen I simply shut down trading as one thing and start again as something else.

[Shrek]

Try working out 46k per year and you and your Mrs are directors on £11,850 per year plus dividends...

What if your missus is already earning over 45000

Good point

[Crystal-clear]

Try working out 46k per year and you and your Mrs are directors on £11,850 per year plus dividends...

What if your missus is already earning over 45000

Good point

I do see the benefit though if your girlfriend is unemployed or on a low income

[Crystal-clear]

I'm limited, I now pay my accountant £180 per month instead of £30, so any tax savings are eaten up.


I do however now have a safety net for my home and car to be never taken off me should the unthinkable happen. If anything were to happen I simply shut down trading as one thing and start again as something else.

Seems pretty steep 

[Martin Lane]

Hi
I have just spend 3 hours with my accountant and we done both sets of figures, as it is now and if i went Limited, limited works out a little bit less in tax but a lot more in accountancy fees , once you add this to it all there was not much difference in total amount payable ,

Best way to reduce tax is to put loads away in your pension or buy yourself a new van and equipment this way you will be saving 40% of the equipment costs

[John Mart]

And don’t forget the cost of the accountancy fees. No chance of doing those yourself. I think we pay around £700 and that’s cheap compared to most on here.

[Stoots]

ok

so on a PROFIT of 46k

Ltd is £36,838.21 take home

Sole is £35,634.76 take home

according to this

https://www.employedandselfemployed.co.uk/limited-company-tax-calculator

accountant fees will swallow a few hundred of that saving an of course all the figures will vary based on a lot of factors.

[Don Kee]

ok

so on a PROFIT of 46k

Ltd is £36,838.21 take home

(But your house is safe if the business goes t1ts up, how much is thar worth?)

Sole is £35,634.76 take home

according to this

https://www.employedandselfemployed.co.uk/limited-company-tax-calculator

accountant fees will swallow a few hundred of that saving an of course all the figures will vary based on a lot of factors.

Dont forget the value of liability in all of this, it may only have a financial value if things go wrong, but we all (hopefully) have various insurances in the hope we never use them.

[mike1986]

But am I right I’m thinking anything over 46k you pay 19% Corp tax + around 7% dividends tax + 1% NI? That would make a 13% tax saving as opposed to 40% tax you would have to pay otherwise?

[Crystal-clear]

But am I right I’m thinking anything over 46k you pay 19% Corp tax + around 7% dividends tax + 1% NI? That would make a 13% tax saving as opposed to 40% tax you would have to pay otherwise?

No not 7% dividend tax because you go into the higher rate
46k made up of basic and divs every pound over the 46k works out more 48%
It's clear to see that taking money out the company is an issue and can be more expensive if you want lifestyle.

I'm realising that a company is more intended for growth. You pay yourself what you need the rest you keep in your account and unlike being kept in your personal account what you will be taxed at the higher bracket you will be taxed only 19%.

I think this varies from person to person if you'd like to keep your money in your account and spend it on your personal life then I would say going limited probably is not a good idea.
If you're a sort of person that likes to make investments and grow your business i.e. not needing to make crazy Investments before the tax year is up just keep the money in your company account because it's a low tax.
The other thing you can do is you can purchase property as a company I'm pretty sure that if you make for example £100000 profit and you find a property up North for £50,000 essentially you've only made a £50,000 profit which is taxable.
The following year your business income grows by the rental income which is also added to your profit. If you are planning to do this as a sole trader you would pay a lot of tax along the way.

I think Ltd and having a company is more directed for business growth eventually when you want to take large sums of money out you will pay more tax but at the same time it would have been more efficient for you to grow the business and various Investments along the way within the business like assets.

 So when you do decide to give yourself a £50,000 dividend payment and end up paying £20,000 tax or whatever it is it's important to make smart investments where perhaps the property you purchased the previous year has made £10,000 of that tax, although of course it's all added to your prophet it's just a mental way of getting around it where you're not really paying at the property is.

Anyway different horses for different courses if you want to grow and you want to invest I think that Ltd is the way to do it.
If you want to just spend all your money and all the time then probably not the best idea.

[Kev Martin]

There is a lot more to being Limited v Self Employed than the few examples above.  Each company should consult a qualified accountant prior to making the jump.  If you are doing it for the alleged £800 savings per year then you are doing it for the wrong reasons.