With the new fiscal year approaching, (06/04/14), and the economy showing positive growth your potential profits are going to rise and inevitable your tax liability. Now is the time to review if your legal, (Trading), status is best for you.
If as a Sole Trader your profit is £20,300/annum and you have a partner who is not currently employed in just five years you will save £10,127 in tax though a simple change to a Limited Company. As your profits rise these savings are enhanced.
Thinking of setting up your own business with projected profits of £40,000/annum you would save £9,950 tax in 5 five years, when your partner joins these saving will rise to £17,902.
If that’s not enough to convince you each director of the company can withdraw £38,474 in a year without paying any personal tax. Above this you enter higher rate tax but would only pay 22.5% additional tax compared to a Sole Trader who would pay 41% tax on personal income above this level.
The company can also be used for long term saving/income by contributions into a pension which are also tax deductible to the company. With a mid-range pension fund showing growth of 9% this year and for every £5,000 contributed saving £1,000 in corporation tax you can easily build for the future.
Have a young family but losing your Child Benefit; as a company, with your partner as joint shareholder your personal income can be halved and thus regain your full benefit.
We can help you with every aspect of the decision process and implementation of the above. Should you wish to discuss this further then please contacts us>>