Your opinons please!

[Newbus08]

In the next couple of weeks I am looking to set up a Limited company of which I will be a Director.

I work full time and currently a 40% tax payer (boo!), I will continue in my full time job but will run the business alongside my main job. My main concern before setting up the business is getting taxed to death on any profits.

I am not looking to take a monthly wage from my business it is more of a savings plan to build up a certain amount of money.

When the business starts I won't be VAT registered and I expect a minimum turnover of around £20,000.

Is a Limited company the right way to go??

 

[CassioAcc]

In your circumstances it seems the best way to go. As a Sole Trader you would be taxed on your Business profits as additional income.
As a LTD, the company will pay Corporation Tax on its profits at 21% (currently).

 

[KM-Tiger]

Is a Limited company the right way to go??

Quite probably, but I'd say your best way to go would be to an accountant to advise you further on this.

If you are going to accumulate cash in the company, then you need to find something better to do with it than let it depreciate in a bank account.

You will need good advice on this.

 

[JulianHobbs]

It definitely seems the right way to go for you.

As sole trader personal income tax will be levvied on your business profits at the higher rate of 40%.

As a Corporation, profits chargeable to corporation tax are taxed currently at 21% for smaller companies. If in future years, if you wanted to pay yourself dividends out of the company (especially in years when you have no other income) you will be able to take out about 40k a year without incurring additional income tax. Dividends are taxed at 10% until the higher rate when they are taxed at 32.5%. However, remember dividends come with an implied tax credit of 1/9th (ie tax already paid) meaning that any amounts of dividends in the starting and basic tax band will not incur additional income tax (as long as no additional income that year).

You also will not pay National Insurance Contribs on dividends (but you will as a sole trader)

Julian Hobbs
Chartered Accountant

 

[Newbus08]

Fantastic many thanks for your replys

 

[Emily Caver]

Hi:
I think that is not very honest to look for the best strategy for taxing evasion. I really don´t know your personal conditions, but you seem that you have enough money to share with your country.
Emily Caver
Designer
Tokyo

 

[nasirs]

I disagree with you Emily. He is paying what he is suppose to pay according to law, also will be paying Corporation Tax on the company profits as well.

There are other ways to help the country as you could give extra to charaties (depending on an idividual)

 

[Cromulent]

Hi:
I think that is not very honest to look for the best strategy for taxing evasion. I really don´t know your personal conditions, but you seem that you have enough money to share with your country.
Emily Caver
Designer
Tokyo

What? You think paying 40% in taxes on your personal income, plus 21% corporation tax plus 10% dividend tax is not enough contribution to the country?

 

[taxattack]

In the next couple of weeks I am looking to set up a Limited company of which I will be a Director.

I work full time and currently a 40% tax payer (boo!), I will continue in my full time job but will run the business alongside my main job. My main concern before setting up the business is getting taxed to death on any profits.

I am not looking to take a monthly wage from my business it is more of a savings plan to build up a certain amount of money.

When the business starts I won't be VAT registered and I expect a minimum turnover of around £20,000.

Is a Limited company the right way to go??

1 How confident are you that the business will make money? If it doesn't, self employment will enable you to offset losses against other income.

2 One option might be to make pension contributions from the company. These would be allowable against Corp Tax, but it obviously limits your access to the money, so whether it is suitable depends on your circumstances.

Chris

 

[Joff]

Hi:
I think that is not very honest to look for the best strategy for taxing evasion. I really don´t know your personal conditions, but you seem that you have enough money to share with your country.
Emily Caver
Designer
Tokyo

How bizarre!! Newbus08 is looking at tax minimisation which is perfectly legal and every company should follow this practice to maximise their profits. Tax evasion is when you are properly due taxes and look to find ways not to pay!

 

[Joff]

Anyway, in my puzzlement at Emily's post, I completely forgot to post the comment I was going to which was to thank everyone on this thread for their comments. I'm in a similar situation to Newbus08 and had posted my query today in this section and also the Legal section as I hadn't seen this thread. Very useful!

Definitely getting into this forum! What a great idea!