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Sam, Accountant
Category: UK Tax
Satisfied Customers: 13944
Experience:  26 HMRC expertise, PAYE, Self Assessment ,Residency, Capital Gains, CIS ask for Sam Tax
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I have a website which is something between a hobby and start-up.

Customer Question

I have a website which is something between a hobby and start-up. I do not have a company registered but I have hired a freelancer ( to do some work for the project.
My question is whether there is some tax break in the UK tax law that I might be able to use if, for example I register a company (in the UK) - LLC or other. Are there any disadvantage to registering a company? Thank you.
Submitted: 4 years ago.
Category: UK Tax
Expert:  Sam replied 4 years ago.



Thanks for your question


You advise that you do not have a company registered, but do you declare this income to the tax authorities?

What do you trade from this website?

You make reference to UK law, are you not based in the UK? And what tax breaks are you looking for, that direct you towards a company or LLC (what is an LLC? as this is not a UK recognised structure)




Customer: replied 4 years ago.



Thank you for your answer. Here are my answers to your questions:


There is no revenue from this site. (It is still a work-in-progress and it will offer a service not goods). There are only expenses and I don't foresee to have revenue for at least 1 year.

I am based in the UK, full time employed. The LLC abreviation I was referreing to is Limited (Liability) Company


So the question generally is whether there is any tax advantage (as I am paying for contractors from my after-tax income from my full time job) to set up a company in the UK.

Expert:  Sam replied 4 years ago.



You are referring to limited companies (and there are sole traders and limited liability partnerships but no limited liability companies !)


Unless your net turnover (income less expenses) is in excess of £200,000 there are no tax savings to be made, as although the tax rate would be at 21% as a limited company this does not become tax efficient until this level. And furthermore if you need to engage accountancy services, then this eats into any savings that could exist as these can run into thousands of pounds each year.


PLus as a sole trader you can claim the losses you are incurring (but would to register now for self employment) with paying the contractors, which you can offset against your PAYE income, thereby refunding you back tax.