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(1/5) The three-person tax problem.
It's possible to work for the same employer and be taxed in different ways depending on whether you're:
Employed
Self-employed
A limited company
Read on to find out more
It's possible to work for the same employer and be taxed in different ways depending on whether you're:
EmployedSelf-employedA limited companyRead on to find out more
(2/5) These differences arise because of the different ways the tax system deals with different things.
Employees pay income tax and national insurance.
Employees pay income tax and national insurance.
(3/5) The self-employed pay income tax and Class 4 national insurance, which is lower than an employee.
(4/5) Owners & sole directors of limited companies can pay themselves a salary so just enough national insurance is paid to qualify for a state pension.
The rest can be paid in dividends, with a lower rate of income tax, while the company still pays corporation tax on profits.
The rest can be paid in dividends, with a lower rate of income tax, while the company still pays corporation tax on profits.
(5/5) We're exploring the three-person tax problem in our evidence session on Tuesday 20 October at 9.30am as part of our #TaxAfterCoronavirus inquiry.
Watch it live here
https://www.parliamentlive.tv/Event/Index/226bccf3-5b87-4db4-9f91-d7a7ba8080d8
And find out more about our inquiry here
https://committees.parliament.uk/work/465/tax-after-coronavirus/
Watch it live herehttps://www.parliamentlive.tv/Event/Index/226bccf3-5b87-4db4-9f91-d7a7ba8080d8
And find out more about our inquiry here
https://committees.parliament.uk/work/465/tax-after-coronavirus/
