I currently have a 'day job' as a web designer. I am considering taking on some freelance work which I have been offered and this would be completed in evening/weekends whilst also retaining my day job.
I am trying to work out the most tax efficient method of operating these 2 income streams together.
I am confused by how much tax i would pay (ignoring deductions for now) if i chose to operate the freelance work as a limited company.
- My day job salary is currently £49000 per year
- My projected income Jan-Dec this year from freelance is £26500
From my initial investigation it would appear that by using a limited company setup, I would pay 20% corporation tax on the freelance income and would be able to pay that money to myself as a dividend which would incur no further tax. Is this correct?
If not, what would be the most tax efficient method of operating?