“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
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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