better to be taxed as an individual or via a Ltd company?
My partner is an NHS consultant, paying tax at the 40% rate. They are shortly due to start working for a private clinic too. I am aware that many of her colleagues have themselves set up as a Limited Company and their private earnings are paid to the company rather than them as an individual, so I am wondering if an arrangement of this sort would be the right thing for my partner to do.
If she just takes her private income (less any deductible costs) as an individual then she'll pay 40% tax on it via self-assessment. Whereas via a Ltd company, the company would pay 25% corporation tax on profits and then any retained earnings extracted via dividend > £1,000 would be taxed at 33.75%, which would be a combined overall tax rate of more than 40%.
If you also factor in the admin and cost of setting up and maintaining a Ltd company, I am not sure why people do it that way?
Am I missing any potential benefits or circumstances in which it would be more tax efficient to use a Ltd Company? is there anything else that we should consider when making this decision?
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