In this episode Carl explains the advantages to being self employed either as a contractor or freelancer. He also looks at the significant downsides and how contractors and freelancers can protect themselves.
If you’re a company owner, contractor or freelancer working through a limited company or an investor then you are probably already aware of the changes to the dividend allowance that are happening from the 6th April 2018.
Just to recap, dividends are a way of sharing out the profits made by companies. For people working through a limited company it can be a much more tax efficient way of paying yourself.
Currently you can be paid up to £5,000 per tax year in dividends without incurring any direct Income Tax. This is called the dividend allowance. Any additional dividends paid above this are subject to dividend rates of Income Tax.
From the 6th April the dividend allowance will reduce to £2,000, a 60% reduction!
But if you think it’s just a case of paying a bit more tax due to the loss of some of the dividend allowance, think again.