A Limited Company is a legal entity in its own right that is owned by a shareholder(s) and ran by a director(s). Because it is a legal entity in its own right the shareholder(s) enjoys limited liability which generally means they are not liable for liabilities of the company. A limited company must have at least one shareholder and one director. The company shareholder(s) can also be the director(s).
Companies currently pay corporation tax on taxable profits at 21% (taxable profits up to £300,000). The company can pay out distributable profits as dividends (currently free from National Insurance) which are subject to income tax on the shareholder(s).
The shareholder(s) is only taxed on dividends paid out the company therefore leaving an option to retain profits in the company which can be later distributed as capital and currently subject to tax at just 10%.
Trading via your own company means your spouse could subscribe for shares in the company. In addition a non earning spouse could receive a salary in order to utilise their tax-free personal allowance. Dividends to utilise their basic rate tax band can also be paid thereby potentially saving tax and National Insurance of 51%!!
Tax savings will be further maximised if current total income exceeds £100,000 due to implementation of a new legislation that withdraws your personal allowances for income between £100,000 and £112,950.
We can do all the work for you, from setting up the limited company, dealing with the company's annual reporting obligations to Companies House, dealing with HMRC regarding all company matters, appointing directors, issuing shares and paying dividends.
Tax savings are possible no matter what your circumstances, contact us now to find out how much you could save: Enquiry
