Steveotbc was the guy who posted this...

So you want to stop being an employee and become self employed, either as a sole trader or via a limited company?

Basically, the first thing to establish is whether that's possible. HMRC are very hot on making sure that something that is an employment relationship is taxed accordingly. The relevant guidance / law is in IR35 - it'll come up if you google it.

If you get past that stage and are satisfied that you could demonstrate that it's appropriate for you to provide your services via a company or other entity, then as you say, it's a matter of considering how best to do it.

If you have a company, you could have yourself on a low salary and pay tax via paye and get the rest of the income via dividends (assuming the company is profitable). Dividends are taxed at a lower rate. However, there would be a corporation tax liability for the company to consider too. Also, a company brings with it an additional admin burden eg filings with companies house, tax returns etc.

If this is something you're seriously considering, I think you need to get some proper advice from an expert. If you read around IR35, that should hopefully be a good starting point.

I took that advise and have been a limit company ever since... Best thing I have ever done

Posted By: hoolahan on August 7th 2013 at 19:09:07

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