Sole Trader or LTD Company?

[Manchester]

Hi All,

Just asking for a bit of advice on behalf of a friend.  She's concerned she will be made redundant over the next few months as she works as a personal assistant within a cinema company.  She's starting off her own business trying to pick up some freelance work as a virtual assistant.  She will remain employed as long as she can and she earns around £30k pa. 

She doesn't know whether to set up as a Sole Trader or Limited Company.

Can anyone offer advice?

[ExitViaTheCashRamp]

I am not an accountant...

 I do own my own LTD company. In earlier times I would suggest that it depends on circumstances - there are ways to (mis)use LTD status for tax purposes even on £30k earnings.

 However on £30k the tax benefits are small and the accountancy charges will probably easily outweigh them. More than this, if the duration of the contract is short then closing down the company is (according to others I know who went from LTD to perm inside their end employer) a massive arse to do so. You have to close it down too as otherwise you are still responsible for all sorts of filing to HMRC on a very regular basis.

 IR35 changes will almost certainly be reintroduced next April and this years aborted run showed that many employers were not keen on using LTD personal companies at all under the new rules.. even for contractors that had been working for them for years & years. So at best, your friend will likely have 9 months or marginal gains for long term pains and additional costs.

[Manchester]

That's great advice, thank you. 

I suppose the tax efficiency of an LTD is essentially the price of more work for her to do.

Although ST will lead to more work with tax returns (which as a VA she should be well equipped to handle).