Most tax beneficial way to set up Ltd company

lovinituk

MoneySavingUser wrote: »

Wrong.....You receive a 10% tax credit on dividends and dividends are taxed at 10% in the basic rate band so there is no tax to pay, but once you go into the higher rate band they are taxed at 32.5% so after the 10% tax credit you have to pay 22.5% tax on them! (then in additional rate band 42.45-10% = 32.5% to pay)

Sorry, my bad! I have only just incorporated my business and I slightly misunderstood the no tax to pay part which was only relating the 10% tax credit cancelling out the 10% tax to pay for basic rate payers only. Thank you for clearing that up.

cb4fwh

DJBenson wrote: »

Good luck with your venture - I've been doing it for a month (3 invoices) and my bank balance tells me it was the best decision I have ever made

Indeed. I had the same feeling when I submitted my first invoice. However, I had a different feeling when I was given notice!

I guess what I'm saying is be sensible with the money you take out of your business, as there will be times when you are out of work & the market is getting more competitive day by day.

Two of my colleagues were between contracts for 2 & 3 months respectively recently. Btw, I am also a contract BA...

YoungBusinessman

I also need to follow this thread to see how it pans out, will be starting as ltd company in April 2013. Will keep all profits in business for at least the first year as back up funds. Then will only take a % out between me and oh, her % will increase when off on maternity. Thats a short 5 year plan....