Self-employed benefits loophole

[Mich the Tester]

I know several self-employed peeps in my area - they won't go Ltd because they worry about the cost of an accountant. I've pressed them to try to understand what they mean and they're convinced that being Ltd will cost them more money than being SE so they won't convert.

EDIT: I suspect they haven't explored the low salary / high divs route

My accountant costs me about 2000 euros per year. He saves me a lot more in terms of getting every last cent out of all the possible tax breaks.

[Moscow Mule]

I know several self-employed peeps in my area - they won't go Ltd because they worry about the cost of an accountant. I've pressed them to try to understand what they mean and they're convinced that being Ltd will cost them more money than being SE so they won't convert.

EDIT: I suspect they haven't explored the low salary / high divs route

I imagine there is a point where additional personal income tax & NI is actually less that Corp tax + Employers NI + costs of running ltd (assuming you want all the money you generate yourself).

IIRC the claimable expenses regimes are similar.

Not sure where that point is, but I'm sure somebody who is quite bored will work it out for us all..

[Cyberman]

He's not entitled to contributions-based JSA but surely they are entitled to other benefits such as housing, child, council tax and tax credits because of her low income. This does not make sense to me at all.

[Sysman]

I imagine there is a point where additional personal income tax & NI is actually less that Corp tax + Employers NI + costs of running ltd (assuming you want all the money you generate yourself).

IIRC the claimable expenses regimes are similar.

Not sure where that point is, but I'm sure somebody who is quite bored will work it out for us all..

I went into this in the late 1980s. My accountant told me the crossover point was something like 30K profit. Less than that profit I would be better off as self employed, though I suspect there were different crossover points for different types of business. The figure may have been very different if I had been running a family business.

Obviously this figure has changed over the years, and not just due to inflation, but to changes in various tax rates and bands. Every accountant I talked to when I finally went contracting in the 1990s told me that my turnover was too low for a limited company and I should be self employed, but that was unacceptable to IT agencies.