Could you pay less tax overall by incorporating your business and trading via a limited company?

The answer is generally ‘yes’, unless your profits are less than c. £10,0000 or more than c. £150,0000.

The following table illustrates savings for a range of different profit levels in the tax year ending 5th April 2019:

Profits
Tax payable - Ltd co
Tax payable – sole trade
Saving
10000
£299.44
£295.24
(4.20)
25000
3749.51
4275.24
525.73
35000
6257.01
7175.24
918.23
50000
10018.26
11999.74
1984.48
75000
20287.26
22499.74
2212.48
100000
31618.47
32999.74
1381.27
125000
43412.89
48239.74
4826.85
150000
59050.26
58739.74
(310.52)

In addition, a limited company will give you further significant tax saving opportunities if you don’t need to draw all the profits from your business; for example, because you wish to reinvest surplus profits in your business.

See https://suttonstax.co.uk/blog/post/income-splitting-and-shifting-reduce-tax-liabilities for more ideas on how to reduce the overall tax liability.

Please call David Sutton on 015394 32540 for a free consultation if you would like to discuss the possibility of incorporation.