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Is it beneficial to trade as a limited company?

There are three major factors to consider when deciding whether it is beneficial to trade as a limited company.

Company cars and company vans

Company car taxation

From a taxation viewpoint, it is usually the case that it is not beneficial to have a company car. This is due to the high levels of taxation charged on the benefit in kind to the employee. In addition the employer has to pay employer’s national insurance contributions on the benefit in kind.

Holiday pay

Number of days

European Union law states that all full time employees are entitled to 28 days paid holiday per year. This includes bank holidays and other company compulsory shut down days.

Making Tax Digital

Making Tax Digital (MTD) is HM Revenue and Customs project designed to reduce tax evasion. Its ultimate goal is to require all businesses, whether they be Limited companies, partnerships or the self-employed, which have income of £10,000 or more to maintain their records digitally.

Mobile Phone Tax Relief

The tax relief available for mobile phone expenditure is dependent upon the type of business which is undertaken, be it limited company or self-employment.

Pensions Auto Enrolment

Pension auto enrolment has arisen as a consequence of the failure of successive UK governments to encourage employees to save for retirement.

Tax Relief on Acquiring Fixed Assets

For the majority of small and medium sized businesses, tax relief on the costs of buying plant and machinery is obtained through the Annual Investment Allowance.   Plant and machinery includes a variety of capital expenditure, including computer equipment, office equipment, commercial vehicles and shop floor plant and machinery.

Taxation of Pension Contributions

Generally taxpayers are allowed to make pension contributions of up to £40,000 per tax year without incurring any tax charge. The £40,000 limit includes contributions from both the employer and employee.

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