Reduce Your Personal Tax Bill and Keep the Profit!

22/02/2013

With personal financial pressures coming from all directions, how can you save money? As a Sole Trader the answer is simple – change your trading legal status from Sole Trader to Limited Company.

With your current year end fast approaching now is an excellent time to change your legal status. We specialise in optimising your income potential by exploiting the most tax efficient trading structures. We would handle all aspects of the change; all that you would need to do is open a new business bank account.

As you can see from the Table below significant tax savings can be achieved with relatively modest profits. As an example with a sole trader profit of £18,000 per annum over five years you could, as a minimum, save £5,127 through this change.

If you have a non-working partner this tax saving could be increased by a further £1,539 per annum.

We would propose to set up your Company in early March giving you time to open your new bank account for trading to start in April. Due to the tax efficiency of the Company we would be able to cancel any payments on account that are generated for January and July next year.

Your first tax bill when operating through the Company would not become due until December 2014 and there would be no payments on account to budget for, thus much more beneficial regarding cash flow.

The accounting requirements, that cover every aspect of your needs, are far more detailed for a company and thus attract a higher fee however in determining the tax savings we have taken into account this additional cost and the benefits to you are still extremely positive.

Sole Trader

Total Annual Tax

Total Annual Tax

Annual Tax

Five Year

Profit

Sole Trader

Ltd Company

Tax Saving

Tax Saving

10,000

595

313

281

1,407

12,000

1,175

713

461

2,307

14,000

1,755

1,113

641

3,207

16,000

2,335

1,501

833

4,167

18,000

2,915

1,889

1,025

5,127

20,000

3,495

2,277

1,217

6,087

22,000

4,075

2,665

1,409

7,047

24,000

4,655

3,065

1,589

7,947

26,000

5,235

3,453

1,781

8,907

28,000

5,815

3,841

1,973

9,867

30,000

6,395

4,241

2,153

10,767

35,000

7,845

5,229

2,615

13,077

40,000

9,295

6,205

3,089

15,447

45,000

11,073

7,169

3,904

19,518

50,000

13,173

8,145

5,028

25,138

The only additional cost is the Incorporation, (set-up) of the Company – this we implement for you, our standard fee is £250.00 plus VAT however for a limited time until the 21st March 2013 if you wish to proceed we will reduce this one-off fee to £150.00 plus VAT.

If you would like know more about Incorporation and on how we can help keep your income in your pocket and not the Governments, please contact us >>

By Tony Czypionka | Accountant and Tax Adviser

Tony is the Accountant and Tax Adviser at Mantle Financial Planning Read more >>

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