employed and self employed versus employed and Ltd Company

[Ironbones]

Hi

I am employed earning £27500, I also work self employed as well started a couple of months back.

I was advised to set up a Ltd company as this would keep things tidy, which I have done. I`m beginning to wonder if this is the best advice as I estimate bring in around £10`000 in the first year and most of this will need to put back into the business. I reckon the same thing in year two.

My question is regarding my tax position would I be in better position if sole trader/self employed, would I be able to claim a tax refund against my employed income? Also I plan to take further training to to benefit my self employed business costing around £3000 per year for three years.

Can any one please help me, any help will be appreciated.

Regards

[RMC]

You can either:
1. have the company struck off by completing form DS01 or
2. inform HMRC that it is not carrying on a business, don’t do any Companies House filing and wait for CH to strike it off.

Trading through the company is not recommended.

[GlobalTaxAdviser]

Hi

Irrespective of the tax situation, in some professions a limited company would be advisable due to the risk involved e.g electrician.

There are other reasons why a limited company maybe the better option.

Remember Corporation Tax will fall to 17% and may fall further

Kind Regards

GTA

[Ironbones]

Hi

Thanks for your replies, so I take it I can bundle both both self employed and employed tax together. Perhaps giving me an advantage if I know business profits are going to be zero? If my expenses for the business are greater than my profit, due to expansion and investment back into the business would I be able to claim some/part of this against my employed tax.

[bd6759]

As a self-employed person, the costs of training are unlikely to be an allowable expense.

[GlobalTaxAdviser]

Yes you can carry back the loss and set against previous years income