Self-employed or limited company

[hiflier]

My wife is working freelance as a nurse advisor available to the NHS and privately. She has been advised to set herself up as a limited company, by an agency that finds her such work. Is there any advantage to her to do this rather than be self-employed? Her earnings will be around £40,000 p.a. and expenses would in the main be travel, meals and accommodation when away from home. She is extremely unlikely to employ anyone else.

[Bambiagain]

In my opinion - others may disagree, so feel free to do so - there's not much point in setting up a limited company unless she is likely to have assets she needs for her job. If as a limited company she were to get into financial difficulties, debts incurred would be payable by the company and not by her personally, which would obviously be good for her (and you) as she would not be in a position where she could lose personal property such as her car or her home. But as a nurse advisor would she likely to run up substantial debts? I doubt if it is necessary to act as anything other than a sole trader, but maybe the agency has sound reasons for advising her otherwise.

[Zacs-Master]

Her accountant should be able to advise her.

[boxtops]

Will she agency explain why they are making this recommendation? I'm wondering if there is some advantage to them in referring to a limited company rather than to a self-employed person.

[Tom Braider]

The agency wants to free itself from having to operate PAYE, that's all.

[Skyline D]

Tom is correct.

Plus there are several potential tax advanatages to the taxpayer herself in going through a company. It depends whether you need all the cash or not. Everybody's circumstances are different and a good accountant will advise whether or not it's appropriate in this case.

[MarkRae]

If you set up your own limited company and work through it, you are self-employed! Perhaps the OP means sole trader?

[RATTER15]

Mark, he can be self employed without forming a limited company, yes as a sole trader.

[MarkRae]

Er, yes indeed! But that isn't what I said. The OP seems to imply that his wife's choices are to be self-employed OR to form a limited company, which doesn't make sense...

[1eyedjack]

Semantics schmemantics. The term "self-employed" is bandied about a lot, not least by HMRC in their literature, but it does not appear in statute. It's universally accepted meaning however is to refer to someone who is a sole trader or an individual in partnership, undertaking a trade, profession or vocation. If she operates exclusively through a company she would not be "self-employed" as universally understood, but would be employed by the company under her control.

As long as she is not caught by IR35 then there currently remain some incentives to operate through a company, if she can keep the admin costs down (especially accountancy). Leaving aside the potential NI savings, there are possible commercial benefits in attracting work if, for example, some customers will only deal with companies (to escape employment law and PAYE obligations), as is common in the IT industry.

[MarkRae]

> If she operates exclusively through a company she would not be "self-employed" as universally understood, but would be employed by the company under her control.

That simply isn't true.

[1eyedjack]

Please yourself, MarkRae. If you have some idle moment you might try downloading the "self-employment" supplementary pages to a self assessment tax return and try to work out how to shoe-horn into the boxes the transactions of a corporate trading entity. Would love to know how you get on.

[Skyline D]

I have no idea what Mark Rae thinks he's talking about but he's wrong. Trading through a Limited Company is as completely opposite to being Self Employed as it's possible to be.

1eyedjack is spot on.