Over 65, already HRT payer, is Ltd still the way forward?

[chrisl]

My friend is trying to work out if Ltd is still the best option.
He is over 65 so pays no NI and also is a higher rate tax payer from his pension income before he earns any money elsewhere.

He will invoice around £100k per year.

He will be able to give his wife some dividends as she is not a higher rate taxpayer but is this really the only benefit in his circumstances? It seems he is no better off being Ltd because of his specific circumstances apart from the shareholder savings?

[lje]

My friend is trying to work out if Ltd is still the best option.
He is over 65 so pays no NI and also is a higher rate tax payer from his pension income before he earns any money elsewhere.

He will invoice around £100k per year.

He will be able to give his wife some dividends as she is not a higher rate taxpayer but is this really the only benefit in his circumstances? It seems he is no better off being Ltd because of his specific circumstances apart from the shareholder savings?

Although employee national insurance is not payable companies still need to pay employer's national insurance. So he would still be better of having a limited company and paying mainly in dividends - as long as he's outside of IR35.

National Insurance - Your Money Guide - Fool.co.uk

[Fred Bloggs]

He can put 100% of his turnover into a SIPP, immediately pull out 25% tax free and take an income off the rest of the money in the SIPP.

[THEPUMA]

He has more to benefit than most if he can afford to live off his pension. Just roll the rest up (other than the wifely dividend) and take it out as a capital liquidation when he retires.

Also, as someone else mentioned, employer's NI will still be due. And remember that if he is earning over £100K, which he will be, there is an effective tax rate of 60% between £100K and £112,950 and an effective tax rate of 50% above £150K.

So yes there are massive savings to be had.

Puma