How JustAnswer Works:

  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.

Ask bigduckontax Your Own Question

bigduckontax
bigduckontax, Accountant
Category: Tax
Satisfied Customers: 3612
Experience:  FCCA FCMA CGMA ACIS
75394688
Type Your Tax Question Here...
bigduckontax is online now

After 25 years as a CEO I am now left my company and want to

Customer Question

after 25 years as a CEO I am now left my company and want to invest in various companies and also do some consulting maybe only working 2 days a week. I expect to maybe earn £1k per day and also have maybe a capital gain of £20k-£50k per year in the coming years. Should i form a limited company or act as sole trader
Submitted: 1 year ago.
Category: Tax
Expert:  bigduckontax replied 1 year ago.
Hello, I am Keith, one of the experts on Just Answer, and happy to be able to help you with your question.
If you act as a sole trader your profits will be subject to Income Tax (IT) and your gains on investments to Capital Gains Tax (CGT).
As far as IT is concerned an income of 1K a day will put you over the 150K a year and into the 45% tax bracket and as you are over the 100K limit you will loose your personal allowance to boot. However if you are only making 104K, ie 1K a day two days a week, then you loose your personal allowance at a rate of one pound for every two you go over 100K income. For CGT you have an Annual Exempt Amount (AEA) (not cumulative), currently 11.1K to offset any gains. Thereafter your gains would be taxed at 28%.
If you form a limited company there is no CGT, companies not being liable to this tax. All gains or losses on share trading would be passed through the company's trading account. All profits in the company would be liable to Corporation Tax (CT) at 20%. Presumably you would be a director so any income drawn would have to be paid under PAYE arrangements as directors are employees per se. Alternatively you could pay yourself dividends, but these would still be subject to IT in your hands at your marginal rate of tax and furthermore do not count against the company's CT computation.
There you are, a quick wander through the taxation maze. Using a limited company could significantly reduce tax providing you do not make distributions. Whichever way you turn, however, you are met with Benjamin Franklin's dictum that in life there are but two certainties, death and taxes.
I do hope that my reply has shed some light on your proposals
Customer: replied 1 year ago.
Ok, thanks , but what are 'distributions'?
Expert:  bigduckontax replied 1 year ago.
Distributions; paying yourself salaries or taking dividends both of which activities will expose you to IT. If left in the company the only charge is CT at 20%.
Please be so kind as to arte me before you leave the Just Answer site.
bigduckontax, Accountant
Category: Tax
Satisfied Customers: 3612
Experience: FCCA FCMA CGMA ACIS
bigduckontax and other Tax Specialists are ready to help you
Expert:  bigduckontax replied 1 year ago.
Thank you for your support.

What Customers are Saying:

 
 
 
  • Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help. Mary C.
< Previous | Next >
  • Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help. Mary C.
  • This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!! Alex
  • Thank you for all your help. It is nice to know that this service is here for people like myself, who need answers fast and are not sure who to consult. GP
  • I couldn't be more satisfied! This is the site I will always come to when I need a second opinion. Justin
  • Just let me say that this encounter has been entirely professional and most helpful. I liked that I could ask additional questions and get answered in a very short turn around. Esther
  • Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help. Mary C.
  • This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!! Alex
 
 
 

Meet The Experts:

 
 
 
  • Sam

    Sam

    Accountant

    Satisfied Customers:

    7088
    26 HMRC expertise, PAYE, Self Assessment ,Residency, Rental Income, Capital Gains, CIS ask for Sam Tax
< Previous | Next >
  • http://ww2.justanswer.co.uk/uploads/TA/Tax Expert/2013-8-21_231010_sam.64x64.jpg Sam's Avatar

    Sam

    Accountant

    Satisfied Customers:

    7088
    26 HMRC expertise, PAYE, Self Assessment ,Residency, Rental Income, Capital Gains, CIS ask for Sam Tax
  • http://ww2.justanswer.co.uk/uploads/BI/bigduckontax/2013-8-12_222058_1.64x64.jpg bigduckontax's Avatar

    bigduckontax

    Accountant

    Satisfied Customers:

    2333
    FCCA FCMA CGMA ACIS
  • http://ww2.justanswer.co.uk/uploads/TA/TaxRobin/2013-8-28_16186_femalebusinessprofessionalbinderhand11038485.64x64.jpg TaxRobin's Avatar

    TaxRobin

    Tax Consultant

    Satisfied Customers:

    524
    International tax
  • /img/opt/shirt.png taxadvisor.uk's Avatar

    taxadvisor.uk

    Chartered Certified Accountant

    Satisfied Customers:

    2845
    FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
  • http://ww2.justanswer.co.uk/uploads/MS/MsAM/2012-6-9_16426_anna.64x64.jpeg Anna's Avatar

    Anna

    Teacher, writer, biologist

    Satisfied Customers:

    270
    Great research skills, variety of work experiences, teaching experience.
  • http://ww2.justanswer.co.uk/uploads/PD/pdheslin/2012-6-6_232056_pambig.64x64.jpg pdheslin's Avatar

    pdheslin

    Consultant

    Satisfied Customers:

    51
    20+ years of internet site creation and search engine optimization. Dozens of search tools at my disposal.
 
 
 

Related Tax Questions