Limited Company Tax
Contracting through a limited company provides
significant tax benefits to any
individual by allowing dividends
to be paid with no PAYE/NI payable. This is
because the distributable funds in the
company have already been taxed at corporation tax rates, which are currently 21%.
If the same income was paid as a salary your tax liability could start at 43.8%
and go as high as 53.8% if your annual salary exceeds the higher tax threshold which
is currently £43,875. (63.8% for earnings above £150,000)
With a limited company there is the opportunity to retain earnings
within the company to pay as salary and dividends in a later period, allowing the
option to maximize tax benefits if earnings are reduced in future
periods.
The flexibility of being able to retain earnings within a company allows the option
to invest the retained earnings within the company giving the possibility of generating
additional income.
Complementary Limited Company Services
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