I am a UK resident, IT freelancer with a UK limited company working with a US client. I am wondering if it makes more sense to switch to an Estonian company. Having read the following article I am still not clear.
In the UK, if my company earns in revenue say £ 4000, I will pay 20 % corporation tax leaving me with £ 3200. I then pay out a salary of 3200 to myself and pay UK income tax on that which leaves around 2560 actual cash. (Assuming I get 20% personal income tax in the UK but not sure.)
With an Estonian company, no corporation tax is paid but 20% tax is paid on distribution of profits. If the revenue is £ 4000, when I pay my salary does that count as distribution of profits? Or will I receive the full £ 4000 and then pay UK personal income tax?