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Freelancer - PAYE vs Sole Trader / Ltd Company
Hi all,
Hoping you can help.
I'm currently freelancing in one industry but getting paid PAYE.
I'm about to take on a second opportunity in a different industry but the company doesn't do PAYE payments and want me to be either a sole trader or operate as a limited company.
Two questions:
- What are the tax implications if I'm paid PAYE by one business but operate as a sole trader / ltd company with the other?
- On that - would it be better to put all my earnings into either sole trader / limited company? If so, which one?
Any help appreciated!
Thanks
Comments
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the first question is whether the company paying you via PAYE would be willing to move you over to being a sole trader self employed or through your own company.
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You would be able to use an umbrella company if you want to stay PAYE on the new contract. Obviously they will charge you, unfortunately its two fold because you have their fee (probably circa £20/week) but because they are a large employer you will have to cover their apprentice levy etc but probably are already on your other job
There is no issues with having multiple earnings over different models. Obv as a sole trader or owner of a LTD you will need to do a self assessment tax return but they are simple enough to do.
Limited company can be more tax efficient but has its own overheads normally (eg accountant) so your revenue needs to justify it. For a start its its own entity so you can leave the money in the company and not pay any personal taxes on the monies if you dont immediately need them. A way to build up a buffer in case your other engagement ends for example.1 -
Yes, I think I could do that…
0 -
Hello, as with any new role, it is important to try and understand for yourself whether it is a genuinely self employed role: https://www.litrg.org.uk/working/employment-status
Depending on the answer, you can find some information on limited companies here: https://www.litrg.org.uk/working/limited-companies and around umbrella companies here: https://www.litrg.org.uk/working/umbrella-company-workers Hope this helps, Thanks
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