I would'nt worry about the CT rate unless you are thinking of expanding the business - I am in a position similar to your new situation and would recommend sole trader every time because there is a lot more compliance required for companies. Remember that even at 12.5% tax rate, you still have to pay 47% (top rates) when taking money out of the company, also in general the revenue will allow the same expenses as deductibles for tax purposes for both.Don't forget the low 12.5% tax rate that applies
woods said:One situation where it may pay to set up a company and the company will purchase a property. The 12.5% tax will enable you to make larger mortgage repayments and so contribute to your business survival. There is also the possibility of buying it through a personal pension fund and renting it to the company. If there is no property involved then I do not think it would be worthwhile to set up a company.
I think that a lot of people are buying the company (including the property) now because it saves 8% in stamp duty so the double tax issue does not arrise.dam099 said:There have been previous posts on here about buying property through companies and in a lot of cases its a bad idea as you are exposing yourself to a double hit of tax.
Im just about to start contracting and was going to set myself up as a limited company (because the recruitment agency told me to) until I read the above posts...Sounds like sole trader is the best option to go with...
There are no hard and fast rules - it all depends on revenue applying their rules of thumb - in general for IT it seems that they will accept as you being self-employed, same with the building industry.Is it true that you can only work for the same company for 3 months when operating as a sole trader
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