why a taxpayer would chose to channel their earnings through a company ?
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laiek12345
1 year ago
Expert Financial Adviser Answer
James Brooke
answered 1 year ago
Because, if they were a shareholder in the company, they could then pay themselves dividends rather than salary or bonus and this would avoid National insurance and the applicable tax rate would then be the Dividend rate rather than the Income Tax rate and this could result in a lower rate of tax.
The HMRC page at http://www.hmrc.gov.uk/taxon/uk.htm might help.
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The HMRC page at http://www.hmrc.gov.uk/taxon/uk.htm might help.