Employed and self-employed; sole-trader or ltd company for self-employed work?

John_Pierpoint

PlutoinCapricorn wrote: »

It seems that the Limited Company is the winner.

I much prefer being a sole trader myself, and doing my own tax returns but the income is not high and my affairs are very simple.

As for IR35, I think it was introduced by the old Inland Revenue many many years ago when people in my then profession of computer programming abused the limited company option. They were full employees, then they created limited companies just to reduce their tax liability and carried on working for the same company 9-5 as employees in all but name. They had the benefits of a limited company without any of the risks: there was so much demand for their services from the 'employer' that they did not have to look for clients or have any time between assignments.

Wasn't the real problem that the tax man did not like Mr & Mrs Arctic Systems being directors of the company, thus getting two lots of personal allowances and 20% tax bands in on the act? It was not just a matter of paying less National Insurance and claiming a bit more on expenses.
Personally I would think that the self reliance of those who survived as self employed would mean less claims on social security in the long run.

Now we have more of the problem, where ONE partner exceeding £50k, reduces the child allowance for the couple. Is this yet another reason for incorporating to create two £49,999 incomes?

The higher effective tax rates being imposed are definitely reducing the
the country's output from high value added individuals and their ability to create work for the young and unqualified.

apositivethinkingcat

Hey - being Limited is useful for a number of reasons. I use and adore the guys at Crunch (I have a code which gets you a free amazon voucher for joining if you want it feel free to PM me) but they do have a new free service as well. I put my invoices and expenses into the online system and they do everything else. I can phone or email them during working hours to ask questions and get them to check things for me. I am sure that would include a contract for IR35. They have helped me with a lot of stupid questions in the past. And I mean a lot...

IR35 has a number of requirements. You have to meet more than one to be considered actually employed - It has to be ongoing. They pay you sick/holiday pay or similar benefits which are unusual for contractors. They can tell you when and what to work on rather than you deciding. You work for only them. And so on and so forth. But what you are doing sounds like a long contract and the paperwork should reflect it. I think you are right to take it into account, but probably don't need to worry.