FN-FORUM: soletrader + limited company

date posted 10th August 2004 18:25

Hi all,

I know this has been covered many times but I'd just like to know if it is
feasible to have a limited company and delegate work from your limited
comany to yourself as a sole trader, as being a sole trader seems to have
more perks such as claiming tax relief on things associated with working
from home, running a car etc etc.

Are there any perks that I have missed with being a sole trader as opposed
to a limited company? I incorporated my company 6 months ago and to be
honest I have seen no perks and the tax associated with a limited company is
well complicated. The only benefit seems to be looking big in the market
place and limited liability.

Another quick question....

I was under the impression that the first 10k profit from a limited company
was tax free in respect to corporation tax, so if say a company made 8k,
that was tax free and so the directors could take say a 4k dividend tax free
as well? My accountant tells me that if dividends are taken, the
pre-dividend profits are taxed at 19% (incorporation tax). Is this the
case?

Is it also the case that the director(s), through self assessment, would pay
10% income tax on the dividend if they were in the mid-tax brackets and
something like 37% if in the high tax bracket?

ooo, my brain hurts....

answers on a stamp

cheers all, much appreciated for the help on this one!

Rob