Limited company advice

Harry Monk:
Agree with this. I do agency work on a PAYE basis, when I started my own limited company was still active from my owner-driver days so I could have worked on a limited company basis for £2 an hour more but when I did the maths it just wasn’t worth it. Possibly in my case it’s slightly different in that I can claim back all of the income tax I pay when the tax year ends but I figure I’d have to work a hell of a lot of hours to make limited company worthwhile.

I roughed out some figures, assuming 50 hours a week, every week.

Under PAYE (£10 per hour, paid over 52 weeks, as under current legislation you’d be entitled to holiday pay):

Gross pay £31,200
Tax (£3,940)
NI (£2,764)
Net pay £24,496

Running as a Ltd Co at £12 per hour, paid over 48 weeks (i.e. no holiday pay)

Company income £34,560
Salary (£11,500)
Employer NI (£445)
Accountant fees (£500)

Profit before tax £22,115
Corporation Tax @20% (£4,423)
Profit after tax £17,692

Assuming all profits paid as dividend, your total income from the company would be £17,692 + £11,500 = £29.192. There would also be a £400 employee NI deduction, so net figure of around £28,800

I’ve probably missed something along the way, but that’s pretty much the bare bones of it.