Hi I've been a self employed contractor for two years (Ltd) and am due to start a new job on an employed basis. I was going to close my business but my accountant said to get the maximum benefit out of my business I shouldn't close it until the end of the year and not give my employer a P45. Will this not mean that I am out on a tax code where I will be taxed on everything? Apparently I can take up to 11k tax free when closing the business which my accountant says is the reason I should keep it open, however I only have £1000 in there and will have no more added to it. I can't help feeling im going to be worse off by not closing the business.
Replies (6)
Please login or register to join the discussion.
Do you trust your accountant? Obviously not as you are posting on here, so why not take your business elsewhere?
Not inclined to give you more advice based on this information I'm afraid.
You can't give your new employer a P45 as you can only get one if you're employed. Self employed people don't give themselves forms P45 when they cease trading.
Or - are you a director of a limited company and not self employed at all ?
Like jowest31 on another thread, you may think this is a trivial difference and they're just interchangeable words. It's actually absolutely crucial.
Does this answer your question, Lion?
"I've been a self employed contractor for two years (Ltd)"
But, to the OP, if your existing business is going to generate no further income I cannot see any merit in continuing with it.
OK, Yorkiedoo. The company is "self employed", if you like, but you just work for the company. You're an employee. The fact that you own the company is irrelevant.
What your family member is, probably, trying to do is to have the money in the account treated, in effect, as a sale of your shares. That makes it liable to CGT, not income tax, and effectively, at the amounts you're speaking of, makes it tax free.
As you skimping a bit on information, I can't be too specific, but that's the gist of it. There is a relatively small amount of money at stake so it's up to you whether you want to bother. Not sure why you should wish to continue with the company unless it's to complete the process of winding up. You have to wait 3 months after ceasing trading before you can apply.