If you pay yourself a salary from a ltd company there's ~14% Employers NI, 12%-2% Employee NI Depending on tax band, 20-40% Income tax depending on tax band. If you pay a dividend there's 19% Corporation tax plus 7.5%-32.5% Dividend tax.
So 46%-56% tax on salary and 26.5%-51.5% tax on dividends. Nowhere near 13%, unless you're talking about 'creative accounting' by running non-business expenses through the company to effectively get them tax free.
- create a company in the Man Island
- You pay yourself the minimum to have ok life style (dividend allowance + progressive tax could make it somewhere around 15% + NI). You move for a year to Singapore, so you are no longer UK tax resident. You close the company.
I don't live in UK anymore and I could do something similar in my location, but I want to pay taxes and my effective rate is good.
Yeah, by all accounts reading online indicates a 45% tax rate for a sole-trader[1].
I'll have to enquire with the few mates there -- don't see a reason as to why they'd bullshit me. Frankly I have nfi however, apologies for the cop-out of an answer.
Sole traders are different to one-person Ltd companies. As a one-person Ltd, you used to get a lot of tax breaks, but over the last 5-6 years they seem to have been steadily eroded.
Anyone paying a rate as low as 13% now is probably using a borderline-legal grey-area scheme, which is dangerous because HMRC not only hit those folks up for back taxes when they find them, but put fines on top too.
If you pay yourself a salary from a ltd company there's ~14% Employers NI, 12%-2% Employee NI Depending on tax band, 20-40% Income tax depending on tax band. If you pay a dividend there's 19% Corporation tax plus 7.5%-32.5% Dividend tax.
So 46%-56% tax on salary and 26.5%-51.5% tax on dividends. Nowhere near 13%, unless you're talking about 'creative accounting' by running non-business expenses through the company to effectively get them tax free.