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Chances are, if you’re reading this you’re a) already a contractor and b) the director of your own limited company. In which case, good work fella/madam! CEJ is proud of you. Feel free to get back to whatever you were doing before you started reading this post.
If you’ve not taken the plunge, though, or you would like to be reminded of the advantages of going limited (as we call it), we thought it might be time to do a quick recap.
Why should I go limited?
Going limited saves you money. If you’re a contractor, then your options are pretty much black and white. You either work for an umbrella company, who will take your annual gross salary, sort out your income tax and national insurance contributions for you and then give you a net income. It’s almost like working as a standard contracted employee and you don’t have to worry about filling in tax returns and the like.
The other option is going limited, in which case the gross salary is all yours but so is the paperwork. It might seem like the best option for an easy life is to work for an umbrella company. But that’s not the case. We’ll say it again: forming your own limited company saves you money.
Even with the dividend tax, which came into effect in April, you can earn significantly more by going limited AND not have to worry about all the ghastly paperwork. If you sign up with CEJ, we will take all the hassle out of going limited and, even when our fees are taken into consideration, you will be left with a lot more than you would be by working for an umbrella company.
Let’s look at the numbers:
If your gross (pre-tax) salary per year is £43,000, then by working for an umbrella company your take-home pay will work out at £32,307.
If you set yourself up as a limited company, then even with CEJ’s fees taken into consideration, that take-home pay goes up by £1,460 – enough to pay for a 10-day all inclusive holiday to Barbados (we’ve checked).
On top of that there are additional potential gains of £2,408 to be had from being VAT registered, leaving you with a potential annual income of £36,175 – £3,868 more than you would be earning in an umbrella company.
What are you waiting for? Go limited today – and don’t forget to stock up on suntan lotion before that holiday to Barbados…