ltd company vs sole trader

InsideInsurance

Mistral001 wrote: »

There have been several discussions here before on this matter. General conclusion as far as I can make out is that there can be a saving on National Insurance and that is all.

Corporation tax + income tax as Ltd =
income tax as sole trader

National insurance is a big one. You will find that if you have a husband and wife where one works and the other doesnt that the non-working partner does a bit of admin and becomes a minority shareholder to justify giving them a salary and use their tax free allowance/ standard income tax rates etc.

Beyond that there can be some other advantages, with many things it is not 100% black and white so it depends how far into the grey you're willing to go to define exactly what they may be.

Mistral001

OK my example was for profit not reaching higher income tax threashold and just One person in business.

I just assumed OP was in that situation but he might not be.

gb12345

Mistral001 wrote: »

OK my example was for profit not reaching higher income tax threashold and just One person in business.

I just assumed OP was in that situation but he might not be.

Unless the person was single and therefore had no one else to include as a shareholder/employee then any accountant worth their salt would recommend involving the spouse (even only as a 50% shareholder to maximise dividend withdrawal).

With a lower rate tax salary then yes, it will become less appropriate the lower the salary gets, as the personal allowance gradually cancels out the gain of not paying NI.

Someone earning about 40k would probably save a couple of grand.

Equaliser123

Mistral001 wrote: »

Please tell us more.

There have been several discussions here before on this matter. General conclusion as far as I can make out is that there can be a saving on National Insurance and that is all.

Corporation tax + income tax as Ltd =
income tax as sole trader

You cannot 'conclude' until you know the particular circumstances. Likewise for VAT and whether to register.

Hence my surprise that there has not been a recommendation to consider the tax situation.

InsideInsurance

Equaliser123 wrote: »

Hence my surprise that there has not been a recommendation to consider the tax situation.

Well the actually question asked was effectively "can I operate as a sole trader with a trading name if I have registered a limited company with the same trading name".... wasnt actually any question about tax or which mechanism would be better etc

Equaliser123

InsideInsurance wrote: »

Well the actually question asked was effectively "can I operate as a sole trader with a trading name if I have registered a limited company with the same trading name".... wasnt actually any question about tax or which mechanism would be better etc

No. But the discussion went that way.