Below is a comparison of the tax savings available working through a limited company versus PAYE.
This is based on a rate of £30/hour and working a 45 hour week.
|
Limited company
|
|
30
|
/hour
|
45
|
hrs
|
|
|
monthly
|
5 850
|
|
|
|
|
|
|
|
(a)
|
wage
|
477
|
|
|
(b)
|
max expenses (monthly admin fee incl)
|
585
|
|
|
|
company tax @ 21%
|
(1 006)
|
|
|
(c)
|
dividend
|
3 783
|
|
|
(d)
|
VAT benefit
|
77
|
|
|
|
client payment
|
4 850
|
|
|
|
(a)+ (b)+ (c)+ (d) - admin fee after tax
|
|
|
|
|
|
|
|
|
|
Monthly after-tax earnings
|
4 850
|
|
|
|
|
|
|
|
PAYE
|
|
30
|
/hour
|
45
|
hrs
|
|
|
Monthly incl Leave
|
5 850
|
|
|
|
PAYE
|
1 501
|
|
|
|
Employee NI
|
372
|
|
|
|
Total Taxes
|
(1 873)
|
|
|
|
|
|
|
|
|
Monthly after-tax earnings
|
3 977
|
|
|
|
|
|
|
|
Monthly Limited Company savings
|
873
|
|
The City Accountant operates on the basis that all our clients using a limited company do so with an awareness of the issues surrounding IR35. The above comparison is only an indication of the possible savings, and actual savings will vary from client to client.