thinking of going ltd - corporation tax question

[Kelly_33]

Hi,

My other half is self employed as sole trader at the moment, and we are thinking of going ltd. My question is, is there a lower corporation tax level other than the small company rate of 20%

thanks
Kelly

 

[Robert Pearce]

No, there isn't a lower rate.

 

[elaine@cheapaccounting]

No but have a read of this - whya re you a sole trader ..

http://www.cheapaccounting.co.uk/blog/index.php/why-are-you-a-sole-trader/

 

[MyAccountantOnline]

Hi,

My other half is self employed as sole trader at the moment, and we are thinking of going ltd. My question is, is there a lower corporation tax level other than the small company rate of 20%

thanks
Kelly

No it was 21% for small companies and reduced this year to 20%

The biggest saving for most people who transfer to a limited company is generally the National Insurance saving - class 4 and class 2 NIC which a soletrader pays and a company doesnt.

 

[Remote Resources]

I know this is an oldish thread but I have a query regarding this. I agree with the tax savings, it's a no brainer really. Even at 21% corp tax the savings were there.

My question is regarding going limited part way through the year. Say I am a sole trader now and my tax year ended on 31st March. I go limited next week, so I have two and a bit months as a sole trader and the rest of this year as a limited company. How is this dealt with in terms of calculating profits for the tax year? Does the tax year for the ST end at the last date it operated and a new year starts for the limited co? What about the assets (PC's etc) purchased in April that would now belong to the limited co?

Hope all that makes sense. I am considering doing this as there are other benefits on top of just the tax ones that I am interested in.

Thanks

 

[robindunne]

I know this is an oldish thread but I have a query regarding this. I agree with the tax savings, it's a no brainer really. Even at 21% corp tax the savings were there.

My question is regarding going limited part way through the year. Say I am a sole trader now and my tax year ended on 31st March. I go limited next week, so I have two and a bit months as a sole trader and the rest of this year as a limited company. How is this dealt with in terms of calculating profits for the tax year? Does the tax year for the ST end at the last date it operated and a new year starts for the limited co? What about the assets (PC's etc) purchased in April that would now belong to the limited co?

Hope all that makes sense. I am considering doing this as there are other benefits on top of just the tax ones that I am interested in.

Thanks

You will need to fill in the self employed pages of the self assessment to deal with your income from self employment. Profits made through the Ltd company are completely different, and depending on how you deal with them should be declared as dividend income or salary.

Re assets, there can be substantial savings through valuing your business and "selling" it to the Ltd company. It is a very technical are and you should seek professional advice - but it is certainly worth doing.

 

[MyAccountantOnline]

I know this is an oldish thread but I have a query regarding this. I agree with the tax savings, it's a no brainer really. Even at 21% corp tax the savings were there.

My question is regarding going limited part way through the year. Say I am a sole trader now and my tax year ended on 31st March. I go limited next week, so I have two and a bit months as a sole trader and the rest of this year as a limited company. How is this dealt with in terms of calculating profits for the tax year? Does the tax year for the ST end at the last date it operated and a new year starts for the limited co? What about the assets (PC's etc) purchased in April that would now belong to the limited co?

Hope all that makes sense. I am considering doing this as there are other benefits on top of just the tax ones that I am interested in.

Thanks

The transfer of a business to a limited company can give some really good tax saving oppurtunities which makes it an ideal time to seek advice from an accountant who is experienced in this type of work.