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Starting up in business- save tax using a company

Harish Verma

The amount of tax saved by running a business via a company depends on many variables.

However if we compare tax and profits and assume that a small salary is taken to ensure that basic contributions for NI are paid and all remaining profits are extracted by dividend from the company the savings between a sole trader and company are as follows:

2015/16  

Profit level  £ Sole Trader £ Company  £ Saving 2015/16   £
10,000 0 0 -
20,000 3,100 2,400 700
30,000 6,000 4,400 1,600
40,000 8,900 6,400 2,500
50,000 12,790 8,800 3,990
75,000 23,290 18,800 4,490
100,000 33,790 28,800 4,990

Note: salary = 52 x £155, i.e. £8,060, rounded down to £8,000

Please note, after 5 April 2016 there are changes in how dividends are taxed and we are happy to give advice on

How to set up a company

How much Tax you will save

Running costs of a company

Responsibilities of a Company and it's Directors

Book a free initial phone consultation today.

http://takingaccount.co.uk/collections/entrepreneurs/products/expert-advise-tax

www.takingaccount.co.uk

 



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