Originally posted by TheCyclingProgrammer
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Originally posted by TheCyclingProgrammer
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But your numbers are wrong.
Salary is constant in all scenarios, so let's simplify. Let's assume a £60K profit after salary and all expenses except rent/use of home office. Take home is salary net of employee NI (we'll cheat and round it to £11K for this purpose, since it is the same in all scenarios), rent (net of any tax on rent), and net dividends after tax.
Originally posted by TheCyclingProgrammer
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Originally posted by TheCyclingProgrammer
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Profit £58,800, CT £11,760, take home £41,250, £16040 retained in YourCo. Compared to scenario one, take home is £984 higher, retained funds £787 lower, net taxation benefit about £200.
Originally posted by TheCyclingProgrammer
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Profit £57,600, CT £11,520, take home £41,100, £16,280 retained in YourCo. Compared to scenario #2, £150 less take home but an extra £240 in the company.
Originally posted by TheCyclingProgrammer
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1. £40,266 / 16,827
2. £41,250 / 16,040
3. £41,100 / 16,280
Some benefit compared to the first example, more than you said, but not a huge difference. Most of the benefit comes from being able to claim £100 / month. If you can't claim much more than the £4 / week, you won't get a lot of benefit unless you push the rent to a pretty high (and indefensible) level.
Next year, when employment allowance is withdrawn, you could replace salary with rent. A salary of £9,800 and a rental profit of £1200 will not change income tax at all, but will save over £250, compared to a salary of £11,000, on NI.
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