Incorporation of your business
It is well known that it can be tax efficient to run your business through a limited company. However, this is not always the case for a musician or an entertainer where your company suffers overseas tax on overseas engagement and the Inland Revenue does not allow your company a tax credit for the full amount of the overseas tax suffered. This loss of tax credit may exceed the benefit from you incorporating the whole of your business and we must therefore be very careful when we consider and plan any incorporation of your business.
The amount of the tax credit allowed by the Inland Revenue to your company may be less than the credit that would be allowed to you as a freelancer (click here for Income from Overseas Engagement) because the credit allowed to your company cannot exceed the amount of UK corporation tax payable which is calculated at 20% (and set to fall in future years) of your net profits compared to the higher income tax rates of 40%/45% for you trading as a freelancer.
Click here to email Tim Dauncey for further information or if you would like to ask him a question.
This material provides only an overview of the regulations in force and no action should be taken without consulting the detailed legislation or seeking professional advice. Therefore no responsibility for loss occasioned by any person acting or refraining from action as a result of the material can be accepted by the authors or the firm.