LTD, working separately full-time - save tax??

In message of Mon, 30 Aug 2004, Scott writes

In what sense do you mean 'non taxable'? What tax are they not subject to?

DF

The products are tickets to attractions.

Scott

In message of Mon, 30 Aug 2004, Scott writes

Still subject to VAT. Still subject to Income Tax/Corporation Tax on the profit you/your Ltd Co. makes,

DF

In message of Mon, 30 Aug 2004, Scott writes

RR will be along with a fuller answer no doubt.

You can't combine your own business with an employment elsewhere. But after computing your business profits for tax purposes (less any Capital Allowances) if there is a loss, it can, in certain circumstances, be set off against other income, and thereby reduce your tax bill (or get a refund).

You can't set off a loss made by a Ltd Co. against your other income.

DF

Presumably VAT.

I don't see what size of turnover should have to do with deciding whether to operate as a Ltd Co or as a sole trader.

Not really. You can't offset company losses against personal income. You could offset sole trader losses against other income, but it might better simply to carry the losses forward within the business and to offset them against future profits.

You can of course, within the business, set running costs, loan interest (but not principal repayments), and other expenses against

*business* income, thereby reducing profits (or indeed creating a loss) and hence tax due.

Non-taxable? Do you mean VAT-exempt?

Limited company may be useful but unlikely to be tax efficient.

You pay tax on your total income but you can set your losses against general income for current and earlier years.

if you are an employee of the new Ltd company as well as your current job then both salaries will go through PAYE tax. Similar if you ran it as self employed / sole trader - PAYE in one case and self assesment form in the other.

If you take the benefit out as dividends then corporation tax will be paid on the taxable profits of the Ltd such that at least 19% (from memory) will have been deducted from what you receive.

The operating costs of the business can be offset in either the sole trader case or the Ltd company case.

To think it through you need yo understand how much corporastion tax will be levied on the Ltd Co profits, and how you are going to get the money out of the Ltd Co - salary or divi or both.

Phil

In message , David Floyd writes

I cant find it on the HMC&E site because their 'search' facility is down for maintenance but I have a feeling that I have seen somewhere that 'ticket agencies' only pay VAT on their agency fee, not the price of the ticket because they dont 'buy' the ticket themselves for selling on.

In message of Mon, 30 Aug 2004, john boyle writes

The OP said he had a TO of £K100, so he'll need to be registered for VAT.

In message , David Floyd writes

Yes, I wasnt saying he wouldnt be, but I was pointing out that HE wouldnt be liable for any VAT on the tickets, which is one way of interpreting your earlier post, but merely on his agency fee.

It could also be that he was counting the ticket price as part of his turnover, which it wouldnt be.

It would seem relevent for the Ltd liability if, as seems the case, you are selling on high cost, low margin items. If something should go wrong with a large batch of sales the Sole trader could find themselves with a bankrupting amount of compensation to pay

tim

In message of Mon, 30 Aug 2004, john boyle writes

Agreed

DF

Surely the trader would, in turn, be compensated by his supplier.

"Ronald Raygun" wrote

And if the supplier were insolvent/bankrupt? [That might be what went "wrong with a large batch"!]

by "XYZ dodgy promotions Ltd"?

tim

The OP's scenario is similar to my own. I'm full time PAYE and part-time "business" (a vague term to indicate I'm selling stuff and making money !). If my part-time business is as a sole trader, do the net profits of that business have a possible impact on the tax bracket of my PAYE. In other words, if I'm earning £30,00 P.A Full time, and say £10,000 via the part-time, do the earnings combine, I assume they do, however your answer seems to indicate that the two incomes remain seperate ?

Regards

Ian

You say "In other words" yet you ask a different question!

Of course the two incomes remain separate - they ARE separate!

Adding them together to work out total income for tax purposes is a separate issue though.

The way you ask your questions give the impression that you think that someone has said one source of income would be exempt from tax!

Seems I may have been mis-informed. I was hoping - part time busiess as sole trader /or LTD, I could offset tax in some way to the tax I pay in full time employment.

I gather this is not the case.

Is there any financial benefit I can make from being in full time employment and part time self employed - other than profit?

Scott