Best way forward for a full-time affiliate?

**Seamaster** · 28-07-10

I'm starting to think about tax and the like for when I become a Uk tax resident again.

If I was a full-time AM'er would I be paying the same tax rates as a regular employee or do other bands/rates apply, perhaps self-employed?

What about offahore bank accounts or is that only for the big boys?

I hope to be earning about £2-3k pm on my return so not a lot but enough to pay tax and NI on.

Any tips much appreciated.

**KamikzMX** · 16-08-10

If you're earning 2-3k/month then probably the most tax efficient way would be to set up a limited company and to take a small salary (approx 5k per year) and the rest as dividends, this way the only tax you would pay would be corporation tax on your profits. Profits being everything you earn minus your salary and any business expenses you incur, domain names, hosting, home office costs etc.

If you are earning less than 2k a month then it may not be worth the extra hassle of running a ltd and just trade as a sole trader (self-employed).

It's worth speaking to an accountant, a few/lot of people here use Keith from HRBS who posts on this forum, (have a look at some of the older threads for his contact details), ultimately he wil save you more money than he costs. Also, I use freeagentcentral.com for my accounts and it's a great online accounts package (Feel free to use my referal code to get a 10% discount: 32hgj994)

**Seamaster** · 16-08-10

Thanks for the info.

Still a long way off but worth thinking about.

How much is corporation tax and what sort of % tax does a sole trader pay?

Thanks!

**Barry** · 16-08-10

2-3k a month profit after tax I'd start to consider being a ltd company otherwise I'd stay as self employed.

You will pay tax either way but your accountant can show you ways of avoiding tax within each of those ways of trading eg self employed or a company. The bottom line its your accountant that will save you money.

Either way, at that amount I would look into the flat rate VAT scheme. There are were some great rates for 'advertisers' which is what I classed me as in AM. The flat rate scheme means you can charge VAT at full rate (ie the networks pay you 17.5% more) and you only have to pay a flat rate on your total turnover back to the hmrc (mine was 10%) this is great if your into seo and have no ppc expenses etc, you make the extra.

Ta

Baz

**KamikzMX** · 17-08-10

As Barry has said, the flat rate VAT option is good for maximising profit from AM, and something an accoutant can advise on.

With regards to how much tax you'll pay, as a limited company you pay 21% on your companies profit, so if you earn £30000 and pay yourself £6000 salary and incur £1000 of business expenses (hosting, domains etc) then you will pay tax on the £23000 profit @ 21% = £4830, which will leave you with £18170 to take as dividends.

As a self employed business, if you made the same £30k and had £1k expenses your tax would be £4505 + National Insurance of £1862 so a total of £6367. You can probably get away with claiming more expenses as self employed, so could reduce the tax a bit, but it's still going to be more than as a lmited co.

**Seamaster** · 17-08-10

Thanks. So if I paid myself £6000 salary would I be paying tax and NI on that too?

I will get professional help when the times comes though!

**KamikzMX** · 17-08-10

No, the reason for paying such a low salary is so you stay within the tax free threshold, or go ever so slightly above it so you pay a nominal amount of national insurance (£20 or so) to keep your pension rights for the year