Should you be a company?
Should freelances become limited companies in order to take advantage of
Gordon Brown's largesse? In the last budget the chancellor announced that
companies with profits of up to £10,000 would not be taxed.
To find out, London Freelance Branch invited company director and prolific
freelance Chris Wheal, accountant Eric Longley of Smith and Williamson and
financial journalist Nic Cicutti to a branch meeting on 8 July.
The debate was a little one-sided.
Eric Longley said the proposition appeared attractive. On an income of
£20,000 you might save about £1500, but the downside was the much more
complicated accounts you would have to keep. And you'd be paying an
accountant anything from £50 to £400 an hour.
Becoming a company might suit some people, depending on their circumstances,
but it must feel right for you, he said.
Nic Cicutti said someone earning £100,000 might save about £3000 from being
a company. The real benefits of companies came, for instance, when you
earned enough to leave some of the money in the company, avoiding higher
rate tax, and only took it out in retirement when you were back on the lower
"Unless you have ambitions to go beyond being a very good writer or
photographer, it is not a worthwhile thing to do."
And why was the debate so one-sided? Chris Wheal had had to send his
apologies at the last moment. "Too busy making money," a member quipped. Not
true, it turned out, but rather a useful metaphor for what the meeting