Moving to low paid work from having a Limited Company.

Daveinlincoln

Hi all,
I've had a limited company for the past two years which was just me using the Limited company as a way to be tax efficient.
Due to covid that business is no longer viable and I've been on furlough for the small PAYE i paid myself since march.
My year end is 30th November and i was planning to close the company and just find a normal job.
A part time courier driving job has come up, its self-employed and wont be anymore that £700 a month which fits my personal circumstances perfectly for the next year.
My question is,is it worth keeping the Limited company open seeing as i'lll only be earning £8k a year?
Am I correct in thinking that I'll pay 19% tax on any profit if i run it through the limited company and zero tax if i just go self-employed as I'll be under the £12500 personal tax allowance?
There is also one small question that would make me consider keeping the limited company open and that is in 18 months time I'm heading off to do some travelling and I'm going to be renting my property out and i understand that running that through a limited company is the most tax efficient and therefore that might have a baring on the above question?
Thanks in advance for any advice

pphillips

I don't think it's worth keeping the Ltd company for an £8000 salary because of the running costs.
I believe that salaries are a deductible expense from corporation tax.
In order to get the mortgage interest advantages of a Ltd company, the company needs to own your property.

Speedbird676

If you're going to be renting out your own home whilst travelling and have no other UK income, it would likely be more tax efficient to rent it directly rather than through your Ltd company anyway. You will still get your personal allowance, so assuming your profit doesn't exceed £1,041 per month after allowable deductions you won't pay any tax on it.

On the former question, it also doesn't sound like the Ltd company is a tax efficient vehicle for an £8,000 salary. One question would be how much retained equity you have in the company and the most tax efficient way to extract that when closing the company.

You can, of course, leave the Ltd company dormant if you think you'll need it in future. There will be some negligible ongoing costs to doing that, ie: annual Companies House return.

oldbikebloke

Speedbird676 said:

If you're going to be renting out your own home whilst travelling and have no other UK income, it would likely be more tax efficient to rent it directly rather than through your Ltd company anyway. You will still get your personal allowance, so assuming your profit doesn't exceed £1,041 per month after allowable deductions you won't pay any tax on it.

the company does not own the house so the company cannot let it ("rent it out")
to run the rent through the company, the OP would need to "sell" the house to the company before the letting starts. 

although the OP would not need to be paid cash for the sale (the transaction would be on paper via the director loan account), there would nonetheless be SDLT to pay as it would be a purchase by a "non natural person". Overall simply not worth doing for such short term issues as a travelling period.
As speedbird righty says, leave the rent as personal income and offset the rental profits against personal allowance 

also as said, a "self employed" courier via their own ltd Co for £8k is going to cost more in tax than declaring it as self employed income.
There is also the risk that the "courier" role could be challenged under IR35 rules if done through your own company, meaning any expenses claimed via the company might be disallowed anyway when working out the profit subject to corp tax.

Daveinlincoln

Thank you all for taking the time out to answer my questions,you've confirmed what i suspected so i'll close the limited company
Just one very quick extra question if you don't mind?....the limited company has no assets other than my car which is worth around £4k .Whats the most efficient way of dealing with that?...selling it to myself i guess?