Kow wrote:

Would you not be better trying to set it up in Cyprus? I'm sure things like accountants and day to day expenses would be cheaper there, and easier to deal with if there's a problem, being close at hand. Most businesses these days seem to register wherever the benefits are best.

It's North Cyprus, which is basically a mess. And I'm not planning on being here much longer - we would've already left this year if not for Covid.

Most likely you'll be taxed on all income and then expenses can be claimed in tax returns.

Right. That's pretty much what I expected. Thanks.

For a UK company it works like this:

You invoice (with or without VAT, initially without)

You get paid that goes in to your business bank account (e.g. Job Limited’s)

You will need to set aside a percentage of that payment for Corporation Tax (currently 19%)

You will also need to set aside an amount of NI employer contributions (you’ll have to Google that lol as I never know the exact amount)

You then pay yourself a salary from that (which should be on a monthly basis)

Ideally you want to pay yourself enough of a salary so that you can earn state pension. And tbh, most company directors do that. But you keep it as a minimum to avoid employee personal tax. You’ll also have to pay NI contributions from this pay, but again, keep the salary low and it will be minimal.

The rest of the money is generally taken as dividends, which should be once or twice a year.

You will then pay dividend tax on that for getting paid from the company. The dividends used to be a flat rate, which was great, but in past several years the government has moved to a sliding scale where you will pay more dividend tax the more you take from the company. Ideally, you want to balance keeping some in the company, which is always good for cash flow, but taking enough that you don’t spend too much on dividend tax, but could then use that to add to an ISA for example to ensure you get your yearly tax free allowance on savings.

There’s a calculator here you can use to get an idea of what you would pay, play with the figures: https://www.employedandselfemployed.co.uk/limited-company-tax-calculator

Kow wrote:

Surely you'd want to have a fairly high income in order for it to be worthwhile to register as a company?

This is a fair point too. 

I was a sole trader for three years before becoming a limited company and there is a tax break (or at least there used to be) where you can buy the “value” of the sole trader company when you form the limited company. This gives the limited company a nice tax break in the first year or two of trading. Let’s say you value your sole trader company at £20k you could “buy” that and the Limited company could say take £10k tax break across each year. It’s not real money of course.

If in the UK you could declare additional earnings through a self assessment tax form which will be lumped onto a salary and taxed as such.

So if someone earned £50k as an employee but then did £10k of work on the side their earnings would be £60k. They will have paid taxes on their salary all year but would have to pay taxes on the £10k in one lump sum.

You can also register as a sole trader.

At this point though I dont think you will be getting any of the benefits you initially outlined, such as clients working only with companies.

Sorry, perhaps I led everyone down the wrong path to begin with. I guess the sole trader thing would make more sense for now.

LivDiv wrote:

At this point though I dont think you will be getting any of the benefits you initially outlined, such as clients working only with companies.

There is still that of course. Maybe best to get started as merely self-employed and see how important that stuff is as I go.

b0r1s wrote:

Just be a sole trader. You just declare to the Tax Office that is what you are doing. You’ll need to complete a self assessment each year and still pay tax, it is just a less formal agreement and you don’t have to draw up company accounts.

I've read up a bit on this now, and I'm still unclear what the tax is exactly in this scenario. Is it income tax or a tax on profits?

It seems that it's the latter, and there's only an allowance of £1000 before the tax rate (19%?) kicks in. Surely that's much worse than paying yourself a salary (with 12.5k allowance)?

Self employed is personal tax based on the combination of all your income. You don’t split out what you make as you do with a Limited company, just need to complete a self assessment form online and pay the tax man. Use a calculator, based on what you expect to earn to see what you pay.

It’s generally a combination of salary (if you are still working), plus any earnings from your freelance stuff, but you don’t have to worry about corp tax and dividends etc.

Here’s a calculator: https://taxscouts.com/calculator/employed-self-employed-tax/

Some advice please.

We moved into a new property in january. The previous owners the smiths were here for 7 years. Before that the jones's were here for 10 years. Mail for the jones's keeps coming here: mortgage statements (they have multiple properties), phone bills etc. Now we returned the first few letters to the mailbox with 'not known at this address'. Now im fed up as they keep coming. Where do i stand if i opened up mrs jones phone bill letter and texted her on her number to say "please change your address of the house you moved out of in 2013 otherwise your letters are going in the bin".

Wife says i cant open the bills or letters as not addressed to me.

Any thoughts?

Just bin them. You've made a reasonable effort to notify the sender.

I accidentally opened a tv licence document i thought was for us and somehow the jones's have via direct debit paid for the tv licence for our house. Well i think its our house as it has our address on it. Im gonna call tv licence people tomorrow to find out. I paid our licence two weeks ago. Wish i waited now.

@dante, lol

Hodge360 wrote:

Just bin them. You've made a reasonable effort to notify the sender.

This. Not your circus, not your monkeys.

Nah it will be fine, the deeds will be in Dino's name. Just know where they are in the rare case a bailiff comes knocking.

The guys that rented my flat before i bought it got loads of pay day loans and fucked off back to Ireland. I have had debt collector letters for 4 years now and nobody has come knocking. At first I opened the mail and rang the collectors to try and sort it. They assured me I had nothing to worry about and should write "not known at this address" and drop them in a post box.
I did that for a few months before I started binning them.

Send the mail to that address with the sort it or it goes in the bin message.