Self Employed client profits £22000.
Plan to transfer separately identifiable part of business to company. Profits now Individual £12000 Company £10000. Pay 0% Corp tax . Dividend £10000 and 0% tax and NI. Client saves £3000 a year (22% I tax and 8% Class 4 NIC)
Am i missing something? or does it work?
R Lewin
Replies (2)
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Extra costs ?
Don't forget the additional accountancy fees and compliance work which is required for a limited company - Annual returns, filing deadlines etc. Check the income transferred to the company is not IR35able.
My question too !
I am obviously thinking along the exact same lines as R Lewin . If the dividend is not taxable as the recipient is a basic rate taxpayer , then surely it cannot fail ? Have the government missed this I wonder ? Or can we all go out merrily incorporating companies to split our business and save bucket loads of tax ? Even higher rate taxpayers can save 40% tax if prepared to leave the cash in the limited company it would seem ! What stops the wife from owning a limited company aswell and having a dividend - they have a right to 50% of the marital assets in any case !