Why use a limited Company

Running your own Limited Company can be a very tax efficient way to structure your business.

1st Contact will make sure that you understand the mechanics of working through a Limited Company and optimise your earnings thresholds.

1st Contact aims to assist you by using a combination of strategies in relation to your Limited Company. Some of these strategies include:

• Setting your salary at an optimal level – fundamental to reducing your tax liability
• Claiming expenses through the company
• Registering for Flat Rate VAT (FRV)
• Contributing a portion of your income to an Executive Pension.
• Maximising your dividend payments up to the higher rate tax threshold (£40,835)
• Invest any retained earnings in the company
• Keep the retained profits in the company for as long as possible

You can choose to draw a salary from your company to suit your own personal financial circumstances.

Profits for your small company are taxed at a flat rate of 21%, very low compared to 40% PAYE and 1% Employee’s and 12.8% Employers National Insurance Contributions which is the higher rate tax for employees.

A dividend paid to a director effectively incurs 0% tax up to the upper earnings threshold, after which they are taxed at 25%.