Limited Company v Sole Trader

Marine_life · 20 June 2018 at 11:05PM

I will shortly start a consulting contract that will pay well into six figures.

I don't "need" the money as I already have sufficient income from other sources that already take me well into the higher rate tax band.

My plan is as follows:

- Set up a limited company to invoice the consulting fees.
- Pay my wife a bookkeeping salary of c. 12,000 per year
- Pay corporation tax on the remaining earnings at 20%

Rest of the money stays in the company for the time being until needed.

Any thoughts? Points to avoid?

00ec25 · 21 June 2018 at 7:12AM

if you are that well off why aren't you paying your accountant to advise you?

a Ltd co makes sense as a way to shelter funds for you but is not without implications as a way of getting money to your wife

tebthereb · 21 June 2018 at 7:28AM

For a contract of this size you would be well advised to have a professional review the contract and arrangements properly. A few thoughts though:

- Have you considered IR35?

- Is £12k a year a justifiable bookkeeping salary for the level of your wife!!!8217;s input? You may wish to consider making a director and shareholder for various reasons, but there are other issues to consider here. Is £12k optimal?

- You would need a PAYE scheme at this level of salary which carries its own issues.

- How will you extract funds? Depending on the length of contract and future plans there may be tax planning opportunities to consider here.

Limited Company v Sole Trader

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