I'm trying to find a tax adviser to help with tax planning regarding my side business. When getting services, I usually try to use a marketplace where I can see reviews but I'm struggling to find such a place for UK tax advisers. Does anyone have any tips on finding a tax adviser or marketplaces where you can see reviews? I set out my issue below.
I started a side business last year as a sole trader and the profits have increased significantly over the last 12 months. I'm considering whether I should be incorporating and, if so, what I need to consider from a tax perspective. A few background points:
- I earn approx £80k from my job + £10k pension.
- I'm expecting the business to make at least £70k profit before tax for the 2019/20 tax year.
- I sell digital products online.
- I will be putting in approx £90k of pension contributions this year (current year and remaining prior year unused allowances).
- I do not need access to the profits arising in the limited company for some time and would be happy to leave it in the company so it could eventually be distributed at a lower tax rate when I retire and when I expect to be taxed at the lower rate.
Q1) I'm guessing that a limited company would reduce my overall tax bill as currently my profits are being taxed at 40%+2% and incorporating might bring it to 19%+tax on distribution. Is this right and what would be the most tax efficient for me?
Q2) I also believe that incorporation relief would prevent any CGT on transfer but not sure on the long term impact. Are there any other capital gain tax issues I need to consider?
Q3) What are the impacts if I wanted to revert to a sole trader in a few years time?
Appreciate any initial info anyone has.
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