Tax savings as a limited company versus sole trader for the 2019/20 tax year
There are a number of factors to consider when deciding to trade as a limited company. Invariably one of the primary considerations is the potential tax savings available. We've updated our previous post to discuss the tax savings as a limited company versus sole trader for the 2019/20 tax year.
Whether you are an existing business or a start up, you should never adopt a 'one-size fits all' approach. There are a number of pros and cons to trading as a limited company that you will need to contemplate first.
However, we can give you an idea of the potential tax savings as a limited company versus sole trader for the 2019/20 tax year.
In our calculations below, we have made the following assumptions:
We've also included details for the 2015/16 tax year below for comparison. This was tax year immediately prior to the introduction of the dividend tax.
There's no doubt that the dividend tax has impacted on the potential tax savings available as a limited company. However, the potential tax savings as a limited company appear to be greatest where profits are approximately £75,000 per annum.
Trading as a limited company can also help you manage your tax liabilities more effectively than as a sole trader. For example:
For more useful information, check out our Ebooks here.
And if you'd like to know how we can help you with all of this, or with anything else, feel free to give us a call on 01202 048696 or email us at [email protected].