If uber taxi driver is self employed and has gross income is £32k and expense is £10k so he is taxable on £11K after tax free allowance of £11K
if the same income and expense and has Ltd company with two dirctor with wife. both take wage of £11K each. there is nothing left for tax
i just need to know if above is legal and allowable. please reply
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Wife takes a wage for what? Setting up a company doesn't magically make payments with no business purpose tax-deductible.
That's without considering the potential complications (legal and financial) from trying to transfer such a business into a limited company in the first place.
Or, for that matter, whether a company would be needed at all to achieve the desired aim.
The Uber ruling was about the status of 'worker'. These are self-employed people working as Uber drivers, but the court ruled they are entitled to holiday pay etc as if they were employees. Also see the recent Pimlico Plumbers court ruling with a similar outcome.
My opinion for what its worth and I have perused both judgements is that the appeals will be upheld. In this case it would be very simple to draw up a contract for the wife stating that she is in charge of accounting general company admin matters etc.
The wife doesn't have to take the same as the husband. If the earnings are split with more going to the husband, and say, £5k to wife, it would be less likely to be challenged.
Less tax-efficient, but still a better outcome than before.
And the costs etc of setting up and maintaining a company?
(Though as noted already, other vehicles are available.)
lets get real HMRC are highly unlikely to challenge this . what they should be doing is seeking to ensure people get a fair wage for what they do rather than nitpicking about relative salary values. it is not uo to them to interfere in reasonable commercial arrangements
on a slightly different tack @MDK45 states that taxi drivers were deemed to be employed , that i believe is not quite the case some are quite happy to remain self employed. In a way its similar to the Pimlico problem , where the complainant seems to want the best of both worlds having supposedly earned much more then he would have done he now wants the benefits that are more readily available to employed .
what they should be doing is seeking to ensure people get a fair wage for what they do rather than nitpicking about relative salary values. it is not uo to them to interfere in reasonable commercial arrangements
Meanwhile, back in the real world ...
Is this recent thread of relevance and in particular the contribution by MBK?
https://www.accountingweb.co.uk/any-answers/directors-fee-vs-salary-hmrc...
As has been said, there are of course various issues involved with transferring a sole trader business to a limited company.