Moving from sole trader to Ltd co...

[PeelingmyselfofftheCeiling]

Thinking about childcare vouchers. Anyone done it, any tips?

Get an accountant who knows what they are doing to set the whole package up for you. If in your initial conversations they say 'do you use childcare because there is a potential tax saving there with vouchers' it looks good, if you mention childcare vouchers to them and they say 'I'm not sure about that, I'll look into it' tread with caution.

There is a small wrinkle with the National Minimum Wage to get round, and you don't get the benefit of the NI saving because you won't be paying NI anyway, but they are still a good idea especially for higher rate taxpayers.

Not worth incorporating for on their own, but added to the Class 4 NI saving makes a nice icing on the cake, particularly if your partner works for the company too.

I'd also been thinking about it (seems safer than being a sole trader) but didn't know there was a possibility of doing childcare vouchers. How does that work? Also thought accounts might be cheaper to do for one ltd company than for two self-employed people - am I right?

Also, (question re Mr Anchovy's comment, if you don't pay NI, what happens re entitlement to state pension?

NI
The company pays a salary which is more than enough to qualify for the full basic state pension (this is currently only £102 a week) as well as other benefits.

Childcare vouchers
Company pays each director that can use them £243/month on top of the salary mentioned above. The company pays less corporation tax and there is no tax to pay for those receiving the vouchers.

Cost
Unfortunately it is 10x more complicated to deal with a company than a sole proprietorship (although if there are two of you surely it is a partnership anyway?) Limited company accounts (for companies house), company tax return and iXBRL accounts (for HMRC), payroll (for directors) and 2x personal tax returns will probably cost 3x as much as a single self employed return.

Sorry, should have said:

Childcare vouchers
Company gives each director that can use them £243/month in vouchers on top of the salary mentioned above. The company pays less corporation tax and there is no tax to pay for those receiving the vouchers.

Thanks very much, Mr Anchovy - that answers a lot of questions for me. There are two of us (me and DH) but we don't work together on all (possibly most) of our work - we're two self-employed freelancers.

Yes thank you Mr A, am awaiting accountants' response. It is just me and I would be doing it 95% for this reason though, so maybe not worth my while... Hmm.

There are two of us (me and DH) but we don't work together on all (possibly most) of our work - we're two self-employed freelancers.

This should work just fine as a single company, hardest thing to sort might be PII if you are in different fields.

Remember that if you become Ltd, you are essentially an employee of your own company and are no longer considered 'self-employed'. You are therefore entitled to all the benefits of an 'employee'.