Start a LTD company - but not take wages

[RichTT]

As I work on a rotational basis and want to eventually move out of the discipline I'm in I was pondering how to get a sideline started without getting stung on the higher rate tax.

Am I able to set up a ltd. business and just not take any income from it? Just leave any earnings from the business in a business account until such time as it becomes sustainable as a sole income?

[98elise]

Yes you can, but you will pay corp tax on it.

Someone cleverer than me will give you a more detailed reply

[essayer]

Yes, perfectly possible.
The company could issue dividends from retained funds and the tax you’d pay is treated differently to income tax - use one of the contractor calculators to see the impacts of dividends vs salary.

[RichTT]

I was hoping that it was as simple as that. Thanks.

Don't mind paying corp. tax as that's a given, but I'm loathe to pay higher rate on anything if I don't need to.

Cheers.

[98elise]

RichTT said:

I was hoping that it was as simple as that. Thanks.

Don't mind paying corp. tax as that's a given, but I'm loathe to pay higher rate on anything if I don't need to.

Cheers.

How old are you? Putting it all in a SIPP as a company contribution is very tax efficient.

[DSLiverpool]

Get your ltd to buy you a eleccy car?

[Mr Pointy]

RichTT said:

I was hoping that it was as simple as that. Thanks.

Don't mind paying corp. tax as that's a given, but I'm loathe to pay higher rate on anything if I don't need to.

There's a shed load of information on this site & this guide in particular looks at dividends:

https://www.contractoruk.com/limited_companies/lim...
https://www.contractoruk.com/

[RichTT]

98elise said:

How old are you? Putting it all in a SIPP as a company contribution is very tax efficient.

41, hadn't thought of that actually.

[RichTT]

DSLiverpool said:

Get your ltd to buy you a eleccy car?

I would more likely need a little commercial vehicle at some point but good suggestion.

[RichTT]

Mr Pointy said:

There's a shed load of information on this site & this guide in particular looks at dividends:

https://www.contractoruk.com/limited_companies/lim...
https://www.contractoruk.com/

Thanks, I'll have a good look through those pages.

[98elise]

RichTT said:

98elise said:

How old are you? Putting it all in a SIPP as a company contribution is very tax efficient.

41, hadn't thought of that actually.

You can stick up to 40k a year into your pension, plus use 3 years of unused contributions from previous as long as you have a pension that you could have contributed to in those years. It's called carry forward rules.

If you don't have a SIPP but are starting a business I would suggest opening one now regardless. Even if you don't use your contributions now you are effectively locking in the ability to carry forward a few years down the line.

[mattcooke99]

In a similar vein, if starting a sideline whilst working, can you offset the start up costs against your income from PAYE.

IE What I was thinking, was if you need a van, laptop & tools to start your new business, you could have a chunk of expenditure incurred whilst still working - could that somehow offset against your salary to lower your normal income tax?

[Eric Mc]

No - especially if you run the business through a limited company. Initial trading losses generated by a limited company are generally only offsetsetable against future profits made by the limited company.

[RichTT]

Much appreciated suggestions.

I'm not PAYE currently but self assessment High Rate employed through an overseas company.

Still a lot of research and planning to look at.