Contractors seem to be taking a long hard look at the viability of their limited companies, not all together convinced at accountants’ claims they are financially better off than PAYE.
One of those accountants at SG Contractor Accounting, Dan Mepham said after Autumn Statement that the ‘tax tail would not wag the dog’ for most limited company contractors.
But online, his assessment – and Integro Accounting’s, stating dividends to “still” be beneficial despite the allowance heading for a £1,500 cut, was met with disagreement.
One individual contractor advised another concerned about whether ‘Ltd’ would still have the edge that “it will depend on if you’re happy to plough a lot of your profits into a pension.”
“If not, closing the company may be the better option,” wrote the PSC, who fears that fused with the also incoming hike in corporation tax, her PSC is “no longer financially viable”.
But it’s not just potentially higher corporation tax (applicable from April 6th 2023, on profits over £50,000) that directors are having to factor in to scrutinise the bottom line.
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