Fourth in our five part series in which Rutton Viccajee guides you through the upcoming changes in the taxation of dividends
The change to taxation of dividends produce the following results, using the same assumptions.
Table 2: Tax & NIC burden self employed to limited company 2016/17
|Profit||Sole trader||Company||Tax % in co.||Saving|
- It is still beneficial having the company (as opposed to being self-employed) but the savings are much reduced
- But the above savings are still worst case: it is usual to retain at least some profit in the company; this always increases the tax saving;
- Some clients are ill-advised to dis-incorporate because of other non-direct tax advantages, not least limited liability and (sometimes) VAT.