Limited Company Tax Calculator
The Limited Company Tax Calculator allows you to see a breakdown of your tax if you are self-employed through a limited company. 2016 / 2017 values are used to show you how much you get to keep. More information about the calculations performed is available on the about page.
How does this work?
If you choose to be self-employed through a limited company, your tax obligations are different from if you were simply registered as self employed. All of your business income and outgoings go through the limited company, of which you are an employee. The limited company then pays corporation tax on its profits, and you can take dividends of any remaining profit - which you then report on your Self Assessment tax return. You can also take a salary from the company, which reduces the company's tax bill but can increase yours.
Your limited company's income will be reduced by your salary and any other outgoings you report. If your company is eligible for the NI allowance introduced from 6th April 2014, it can get a credit against the Employer's NI it would pay on your salary. After these deductions, the company's profit is taxed, and any remaining amount is the maximum net dividend you can take. The calculator assumes that you will take all of this dividend, which is then "grossed-up" for the purposes of paying tax. You earn a tax credit of 10% on dividends you receive, however, which reduces the amount of tax you owe.
Being self employed through a limited company can increase your overall take-home compared to being self-employed directly, but at the cost of additional reporting requirements and overheads. Speak to an accountant if you are thinking of changing to a limited company.