Self employed Versus Limited company

Self employed Versus Limited company

We are asked many times, with tax free dividends now at just £2,000 whether it is best to be self employed or Limited.

Now the upper rate of tax starts at £50,000 we will use this as an example.

If you earn £50,000 of self employed profits you will pay £11999.74 in personal tax and NI.

If you earn £12,500 PAYE and take £37,500 of dividends through your Limited company then you will pay £3705 in personal tax + £7,125 in Corporation tax on profits which enabled the dividend, thus paying £10,830 in total.

To conclude you are £1169.74 better off being Limited and with Corporation tax rates set to lower even further, this should only improve.

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