Everyone's talking about tax havens and I hear a lot of TV commentators criticising them but how many of them run their affairs as limited companies to avoid tax? All perfectly legal of course but they can wind up earing far more and paying far less tax than ordinary people. Is that more of less morally wrong than having funds offshore and avoiding tax that way?
Quote:
Here are 10 advantages you should bear in mind when deciding what business structure you should use for your venture;
1. Tax
The main advantage of running your business as a limited company is that you are likely to pay less personal tax than a sole trader.
Company profits are subject to Corporation Tax. Small businesses are taxed at the ‘small profits rate’ which is currently set at 20%. Larger companies currently pay corporation tax at the ‘main rate’ of 21% on profits over £1.5 million. From April 2015, both rates will be 20%.
If you are the director and shareholder of a limited company, you may choose to take a small salary and take most of your income in the form of dividends. By doing this you can minimise the amount of National Insurance Contributions (NICs) you have to pay because dividends are taxed separately, and are not subject to NICs.
As a sole trader, your entire income is subject to NIC rules. Running your business as a limited company could therefore help you to take home more of your earnings.
|
http://www.bytestart.co.uk/limited-c...dvantages.html
A quick check of the Companies House website will reveal how many wealthy celebrity types run their affairs in this manner.