Small freelance contract

Small freelance contract

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Hi

I work in industry and have been offered a small freelance contract initially for 10 months circa £400 per month.

As a higher rate tax payer (just), is it worthwhile setting up a company for this work? I'm unlikely to take on further contracts.

Thanks.

Replies (4)

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By andrew1211
11th Feb 2014 09:52

Is it worth it? From a CT and income tax point of view it would probably be neutral i.e. assuming you have £4k of income and no costs you would end up with £2,400 net assuming dividends were taken. Below the Class 4 NIC limit so nothing to save there. The only advantage is you might get the after tax profit out of the company as a capital distribution saving you £800 in tax using the above assumptions.

Thanks (1)
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By Maslins
11th Feb 2014 10:55

IMHO setting up a Ltd Co for that would be more trouble than it's worth.  Sole trader much simpler.

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Replying to the_drookit_dug:
Red Leader
By Red Leader
11th Feb 2014 11:33

no/little saving

The main saving from using a limited company comes from not having to pay NI compared with the alternative of sole trader.

However in your case:

1) Your sole trader profits are too low to trigger NI.

2) Even if they were, you could apply for self employment NI deferral as your employment income probably already takes you close to the maximum NI payable anyway.

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By Mature Student
11th Feb 2014 15:32

Thanks
Sounds like best to just register as a sole trader and declare income on SA return, yes?

I'll have a look at HMRC'S website re tax and NI due.

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