“Self employed people pay much lower taxes than employed people”. That’s a narrative you will often hear.
Let’s start with a sole trader with taxable profits of £50k compared with an employed person on a £50k salary. We’ll ignore the risks they take and that they may well be keeping others employed.
Self employed: tax and class 4 NI £9,731.80
Employee: tax and class 1 NI £10,480.40
£748.60 better off I hear you say.
Let’s not forget that the employee will also have received £1,312.80 in employer pension contributions
After the first lockdown, like most pilots, I was itching to get back up in the air and getting a few circuits in at City Airport Manchester (Barton) was in order. Great for me – not so great for Joanna.
No tax discussions in this one but probably worth mentioning that whilst HMRC have announced that they will not issue penalties for late filed returns until the end of Feb, the tax still remains payable and they will charge interest on late paid tax!
Self employed people pay much lower taxes
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“Self employed people pay much lower taxes than employed people”. That’s a narrative you will often hear.
Let’s start with a sole trader with taxable profits of £50k compared with an employed person on a £50k salary. We’ll ignore the risks they take and that they may well be keeping others employed.
Self employed: tax and class 4 NI £9,731.80
Employee: tax and class 1 NI £10,480.40
£748.60 better off I hear you say.
Let’s not forget that the employee will also have received £1,312.80 in employer pension contributions
Now for Limited Company directors….
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