Good morning,
I am a new single director no employee ltd company owner.
I hear a lot of people are doing this set up as a contractor in your uk.
Can anybody help with the positives? I’m not asking for single person tax advice just a general ltd company benefit summary.
I’m struggling to get my head around the fact that if I earned £40k, withdraw my salary if £11k and £29k dividend then I don’t pay any tax on the salary within my personal allowance, first £5k I use my dividend allowance but pay £24k dividend tax and corporation tax on the remainder outside of the first £16k tax free allowances (£11k salary and £5k divs).
If dividend tax is 7.5% and Corp tax is 20% equalling 27.5% surely it would be better as a sole trader paying 20% on anything above your personal allowance?
This is not my income as it is now but should be this year but struggling to get any clear clarity on this.
If anybody can clarify any clear tax advantages on a general basis that you can use within a ltd company I would be very grateful.
Thanks
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