Thanks for the reply - am still a bit confused.
As I am employed, and will continue to be while doing renovations, when you mention "if you trade on a self employed basis" under sole trader - does this mean that I will complete a tax return for the property gains and, as a higher rate tax payer, will pay 40% on any profit? What about NIC in this situation?
Are there any other hidden costs relating to a ltd company in terms of filing accounts annually etc? This sounds like a better option in my situation for minimising tax liability?
In terms of deductible costs, what am I able to claim for in all situations (sole trader / ltd company)? Do I just need to keep all receipts to prove costs?
You can be employed and self-employed at the same time.If you are already a 40% taxpayer, you will pay 40% tax on profits from self-employment and Class 4 and 2 NIC, 45% tax if your total income exceeds £150,000. You may be able to claim a refund of some Class 4 NIC after the end of the tax year for which you pay Class 4 NIC if the sum of your Class 1 (employee) NIC, the Class 2 NIC and the Class 4 NIC exceed a certain level. It is possible to defer Class 4 NIC in certain circumstances as you can read here but its not as straightforward as it used to be when there were upper limits for NIC.You can claim capital allowances on tools and equipment you use in a business whether you run it as a sole trader or through a limited company.With a limited company, you have to have deal with more onerous compliance duties such as submitting an annual return to Companies House alongside abbreviated accounts. You also have to submit accounts and corporation tax returns to HMRC annually. Professional fees will be higher than for a self-employed individual.If you are self-employed, you simply prepare a set of accounts and post those figures in your self-assessment tax return as well as income form other sources. Take a look here and here for information on the types of expenses you can claim against bsuiness income.You should retain receipts and invoices for any business as HMRC may ask to see these.
Thanks for the reply. I am still not clear in terms of the costs that I could deduct - would I be able to deduct any renovations costs as well as any tools purchased? This would ensure a minimum profit for tax purposes?
As a limited company, paying 20% tax sounds preferable to 40% plus NIC if sole trader. How much tax would I pay on salary or dividends? And would I have to purchase the property in the name of the company in the first instance?
If I lived made the property my residence, even if I rented another place, how long would I have to live there to claim it as a CGT bill (presumably 28%), rather than pay it as income tax?