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Sam
Sam, Accountant
Category: Tax
Satisfied Customers: 13885
Experience:  26 HMRC expertise, PAYE, Self Assessment ,Residency, Rental Income, Capital Gains, CIS ask for Sam Tax
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Im a qualified radiographer working NHS and

Customer Question

Hello, im a qualified radiographer working for the NHS and have the opportunity to do some private work as well as my wife who is also a radiographer. I would like to know what are our best options with regard to paying tax, and setting up a company. We estimate that turn over will by 10,000 per year, and do not need to draw an income from the company.
Submitted: 2 years ago.
Category: Tax
Expert:  Sam replied 2 years ago.
Hi
Thanks for your question
It would no at this stage be cost effective to set up the limited company with a turnover less than £100,000 as if you draw as salary you suffer tax and Employee and Employer National Insurance x 2 on every £1 PLUS pay Corporation tax at 21%
There certainly would be savings to draw this out as a dividend (as long as once the corporation tax was paid there were sufficient funds left to pay this plus retain the 10% tax credit, but if you use an accountant this will be costly with the Limited Company Tax return for HMRC and Companies House, payroll run (if you pay as salary) and each of your self assessment.
My advise register as a partnership as 50:50 share each, then you will have the income, less allowable expenses and whats left over is charged tax (and may still keep you within the 20% tax bracket depending on your employment income level - but on £10,000 there will be No National Insurance AND if the net turnover remains less than £5965 each there will be no Class 2 National Insurance (sits at £2.80 a week) and fr Class 4 if your net income is less than £8060 each then NIL (between £8061 and £42385 then at 9%) which is MUCH cheaper then a limited company.
Let me know if you wish me to expand further but I am sure you can appreciate the topic of limited company is vast, so I have responded initially with an opening position, and am happy to expand on what you need.
Thanks
Sam
Expert:  Sam replied 2 years ago.
Hi
This I appreciate does not take into account the fact you do not wish to necessarily draw out the money - but even this proves costly as you will have Corporation tax each year (on the new profits)| and still incur tax on withdrawal of money which then becomes a larger lump sum - but you lose so much with the tax on the company and possible accountancy fees
Thanks
Sam

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