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I think the benefits in the UK in terms of tax rate are slowly being chipped away. The wheeze is/was you work, but your client pays a business that you own for

I think the benefits in the UK in terms of tax rate are slowly being chipped away. The wheeze is/was you work, but your client pays a business that you own for your time/expertise. You then have your business bpay you minimum wage (so no income tax) and take the rest as dividends from the company (which are taxed lower than "income"). The tax rates/allowances for dividends have reduced though and there are new regulations on "disguised employment" that make it less lucrative. I think it is still pretty good though, just perhaps not as good as it was (in UK we have NHS so you don't need health care, and employers often match up to 7% for pension contributions)

ealexhudson 5y ago
The "wheeze" you talking about is just avoiding double taxation. The business pays corporation tax on the profit it makes : while salaries are an expense, dividends are not. So you're paying 19% on revenue above the "minimum wage" plus your expenses, and then tax again on the dividends. Whether this works or for you or not depends very much on circumstances. If you're willing to have cash build up in the business it works, if you want to take home over £60k/year gross it starts making less sense.