Question regarding setting up an Ltd and dividents

[Fred Bloggs]

Only made because the OP is a bit light on basic knowledge and the assumption they are looking at BoS work. If either is incorrect then the advice may change, but we don't have a lot to go on...

Fair comment, but whatever his role, he'll have a much harder time earning £21k in his hand using a brolly.

[malvolio]

I disagree with the brolly recommendation. If he/she has a spouse then he can take £10k tax free as divis as well as his £11k tax free allowance. So, £21k tax free income. The cost of running a Ltd Co can be lower than paying monthly brolly fees. Plus, ofcourse he should be able to claim expenses where a brolly user can't.

Only made because the OP is a bit light on basic knowledge and the assumption they are looking at BoS work. If either is incorrect then the advice may change, but we don't have a lot to go on...

[missinggreenfields]

First question
Do I have to pay myself (as ltd) at HMRC this 3.6K once per year (April)?

Then I give myself a divident of let's say 15K (or even the whole of the remaining amount 18K).

Second question
I will have to pay the 7.5% tax on this divident amount, is that correct?

Third Question
Do I have to provide payslips etc to myself for the 10K I will have as a salary?
I only need to do all the above once a year, is that correct?

PS1. If my girlfriend makes the same amount of mine, does it make any difference if we will set up 1 company with 50% each or 2 different ones?
PS2. Is it better just to register myself as self-contractor?

First answer - the company pays corporation tax nine months after the company year end.

Second answer - Yes, once you account for the £5k 0% band

Third answer - no, you don't need to do payslips.

PS1 - I wouldn't mix a company with a girlfriend / boyfriend

PS2 - Only if you can find a client that will work with you as self-employed, but many won't.

Good luck - and find an accountant (I recommend InTouch)

[Fred Bloggs]

I disagree with the brolly recommendation. If he/she has a spouse then he can take £10k tax free as divis as well as his £11k tax free allowance. So, £21k tax free income. The cost of running a Ltd Co can be lower than paying monthly brolly fees. Plus, ofcourse he should be able to claim expenses where a brolly user can't.

[pr1]

Better advice - for 30k a year, go with a good umbrella...

This^^^. 30 K a year gigs shouldnt be contract gigs IMO either. The umbrella used to be more efficient for this level of income but the T&S makes it a little more grey now but an umbrella should still be your first port of call.

Umbrella definitely. Much more likely to be subject to SDC at that pay level as well.

You're all assuming he's going to be contracting? what if he's a stereotypical IPSE "creative" freelancer, surely it would be better to have his own company if each piece of work lasts hours or days rather than months?

[LondonManc]

Umbrella definitely. Much more likely to be subject to SDC at that pay level as well.

[northernladuk]

Better advice - for 30k a year, go with a good umbrella...

This^^^. 30 K a year gigs shouldnt be contract gigs IMO either. The umbrella used to be more efficient for this level of income but the T&S makes it a little more grey now but an umbrella should still be your first port of call.

[malvolio]

Best advice - Get an accountant and fast.

Better advice - for 30k a year, go with a good umbrella...

[Fred Bloggs]

Best advice - Get an accountant and fast.

[apanos9]

Hello all,

I would to apologize for the quality of my question as it may sound quite amateur, but I have just started working as a freelancer and I would like to see my taxation options. A friend told me that it is better to set up an ltd than as self employed, in terms of taxation.

My questions is based on the following example. Let's say that my company, with myself as the only shareholder, makes 30K per year.
I pay myself a salary of 10K per year (not taxable as it is in the tax allowance rate).
I also have expenses of 2K
This means that the rest 18K will have a corporate tax of 20% (3,6K)

First question
Do I have to pay myself (as ltd) at HMRC this 3.6K once per year (April)?

Then I give myself a divident of let's say 15K (or even the whole of the remaining amount 18K).

Second question
I will have to pay the 7.5% tax on this divident amount, is that correct?

Third Question
Do I have to provide payslips etc to myself for the 10K I will have as a salary?
I only need to do all the above once a year, is that correct?

Many many thanks
Panos

PS1. If my girlfriend makes the same amount of mine, does it make any difference if we will set up 1 company with 50% each or 2 different ones?
PS2. Is it better just to register myself as self-contractor?