Self employed or Paye?

Pennywise

Walcott wrote: »

I don't see how 'There's not much difference anymore.....'. Apart from the tax rates being different on the two methods of cash extraction, there is also the obvious difference of no NIC on dividends.

Sole trader. Profit £26,000. Tax would be ~£2,800 NIC would be ~£1,770, total deductions ~£4,570, net "take home" ~£21,430.

Limited company. Profit £26,000, wage £8,000. Corporation tax £3,420. Dividends £14,580, pers tax on dividends £644. Total deductions £4,064, net "take home" £21,936.

So, yes, not much difference, especially as accountancy fees will be higher for a limited company, as will probably insurance and bank charges.

System

Pennywise wrote: »

Sole trader. Profit £26,000. Tax would be ~£2,800 NIC would be ~£1,770, total deductions ~£4,570, net "take home" ~£21,430.

Limited company. Profit £26,000, wage £8,000. Corporation tax £3,420. Dividends £14,580, pers tax on dividends £644. Total deductions £4,064, net "take home" £21,936.

So, yes, not much difference, especially as accountancy fees will be higher for a limited company, as will probably insurance and bank charges.

I must have misread as my post was regarding PAYE vs Ltd and not sole trader vs Ltd.

phill99

If you go down the SE route, remember your client (not employer) has all the trump cards. He has no obligation to offer you any hours (can call you and tell you not to come in for three weeks), you receive no holiday pay, no sick pay, no pension, no pay for bank holidays.




Why would you give the security of employment up?