Tax Advice - Consulting as well as being employed
Discussion
Hi all
I wondered if any of your clever types could advise me on the best way to reduce my tax on consulting work that I do outside my main job. I am in the high earner tax bracket for my employment and therefore have to complete a tax return each year however I dont have an advisor as I simply put in the info on my P60 and P11d. This year I will be working on a project as a consultant and will need to bill a flat fee on a monthly basis but want to know the best way to do this to reduce my tax liability.
My wife is/was freelance until we had kids so no longer works very much but does do the odd job ever few months when she can. I thought about getting her to invoice on my behalf (she kind of does the same job as me) as it is unlikely that she will earn £8k this year, however we have an 8 week old so she is currently receiving statuary maternity which she will not be entitled to if she is working, which is fair enough.
So my question is, is there a way I can invoice for my consulting that means I wouldn't need to pay the 40% tax? Would setting up as a company as a sole trader give me taxable benefits, or would a partnership with my wife be better? Could we leave the money in the company and not draw on it but take it as dividends? Could she draw from the company as a salary when her maternity payments have finished? Would a LTD company be better?
The monthly billings would only be £1,500 per month and only for 8-10months so I don't want to have added complications of corp tax etc, just the simplest way to reduce some tax, if possible?
Any guidance or thoughts greatly appreciated.
Many thanks
J
I wondered if any of your clever types could advise me on the best way to reduce my tax on consulting work that I do outside my main job. I am in the high earner tax bracket for my employment and therefore have to complete a tax return each year however I dont have an advisor as I simply put in the info on my P60 and P11d. This year I will be working on a project as a consultant and will need to bill a flat fee on a monthly basis but want to know the best way to do this to reduce my tax liability.
My wife is/was freelance until we had kids so no longer works very much but does do the odd job ever few months when she can. I thought about getting her to invoice on my behalf (she kind of does the same job as me) as it is unlikely that she will earn £8k this year, however we have an 8 week old so she is currently receiving statuary maternity which she will not be entitled to if she is working, which is fair enough.
So my question is, is there a way I can invoice for my consulting that means I wouldn't need to pay the 40% tax? Would setting up as a company as a sole trader give me taxable benefits, or would a partnership with my wife be better? Could we leave the money in the company and not draw on it but take it as dividends? Could she draw from the company as a salary when her maternity payments have finished? Would a LTD company be better?
The monthly billings would only be £1,500 per month and only for 8-10months so I don't want to have added complications of corp tax etc, just the simplest way to reduce some tax, if possible?
Any guidance or thoughts greatly appreciated.
Many thanks
J
OutlawFlat4 said:
Hi all
I thought about getting her to invoice on my behalf (she kind of does the same job as me) as it is unlikely that she will earn £8k this year,
J
You could do that - if you fancy serving time in jail. That should bring you below the Higher Rate Bracket quite effectively.I thought about getting her to invoice on my behalf (she kind of does the same job as me) as it is unlikely that she will earn £8k this year,
J
I think you need an accountant.
If your wife and yourself are both doing similar work and either engagements are likely to be ongoing, even sporadically, I'd suggest incorporating a Ltd Co which you use to invoice for any work performed between you. Corporation tax will be due on any profits after expenses, salaries etc. This would provide the greatest flexibility and a degree of tax efficiency, but would also introduce accountancy and reporting overheads.
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