Better to earn as individual than company from next year?

[hugebrain]

Hi,

I was hoping to supplement my meager contracting income with some android advertising and in-app purchases.

From next year is it cheaper to do this as an individual paying basic rate tax then as a company paying corporation tax plus 7.5 percent dividend tax?

I'm not expecting huge amounts, a few hundred a week.

[northernladuk]

Wouldn't your accountant be the person to ask about this as he knows exactly what your income situation is so is best placed to advise?

[d000hg]

Wouldn't your accountant be the person to ask about this as he knows exactly what your income situation is so is best placed to advise?

That depends if their accountant specialises in personal accounts or only contractor accounts

Seems a reasonable forum question to me.

[northernladuk]

That depends if their accountant specialises in personal accounts or only contractor accounts

Seems a reasonable forum question to me.

I'd be very worried if my accountant can't help with this. He will know the thresholds and be able to balance the most efficient way going forward depending on how much the OP is withdrawing from this LTD against the possible personal income. It wouldn't be hard for him to knock up the two scenarios for the OP based on exact figures rather than a general yes or no with assumptions and no figures from us.

You are probably right, it is a reasonable question but IMO the answer to his question is to speak to the person that can give hard figures to compare rather than opinions of other contractors or hope one of our accountants can take a stab.

Just my opinion....

[Jessica@WhiteFieldTax]

Based in the common assumptions on how the new regime will work I modelled some figures.

At most income levels dividend still beats self employment, however once you get to the 45% tax band it can swing the other way however not by a significant amount - maybe 1% differential.

This ignores compliance costs, I.e. Accounting fees etc.

I would gave thought you are probably best dealing with the income via your existing company if that's how you contract, otherwise you may want to think about the slightly lower tax rate a company will being cf the admin costs of doing so for a small income if you need to start a new entity.

Also, you need to think about VAT with this. MOSS etc. That may influence your thoughts.

[d000hg]

You are probably right, it is a reasonable question but IMO the answer to his question is to speak to the person that can give hard figures to compare rather than opinions of other contractors or hope one of our accountants can take a stab.

Then this forum is rather redundant because ALL accountancy questions are best directed to one's accountant.

However it's not reasonable to assume everyone has an accountant, or trusts that their accountant's advice is ideal.

[northernladuk]

Then this forum is rather redundant because ALL accountancy questions are best directed to one's accountant.

Not really, we can chew the fat about policy and lots of stuff . Questions like this are specific questions about an individuals person circumstances so should be with the accountant.. but.. you are right when you say

However it's not reasonable to assume everyone has an accountant, or trusts that their accountant's advice is ideal.

Unfortunately a sad state of affairs but true enough.