Sole Trader to Limited?

motinter

I've been running my small business as a sole trader for 3 years now.

It is my only job.

Would it be worth my while to look into switching my set up?

Projected:

Monthly Gross Income: £4000

Monthly Expenses: £500

Tax & N.I: ~£800 pcm

Thanks

Pennywise

If you'd asked this a year ago, the answer would be a resounding yes, but there's a new dividend tax coming into force next April which removes a lot of the benefit of limited company trading as opposed to sole trader. You'll still pay less tax/nic as a limited company, even after April, but you'll have more expenses and hassle, so there may be no real savings anymore.

But, if you don't have to draw out all the profits, i.e. if you can leave some profits in, maybe to build up reserves or buy more stock, etc., then obviously you won't be drawing it all out as dividends and won't therefore be hit so badly by the new dividend tax, so you could well still benefit in that scenario. It's only really those who draw everything out that are worse affected.

SeniorSam

Does your accountant not offer any helpful advice?