Tax advice on Self Employed income for PAYE person

I am looking for a way to reduce my tax bill on extra income earned as a self employed person. I have a PAYE job and I am on the top rate of tax. I earn extra money on a consulting basis outside of my PAYE income. I do an annual tax return and claim appropriate expenses and make a pension contribution annually from this income. But I still give about 30% of my consulting money to the government. I am looking for ways like contributing to a pension etc to decrease my tax bill and gain some benefit. I have an accountant but he is more of a no-frills kind of service. I don't think it is a large enough sum to go to a tax advisor. Any ideas ?

Would you consider opening a single member company for this income, corporation tax of 12.5% is a lot more attractive than PAYE rates

I could do that but I thought if I took money out of the company I would be subject to tax twice. Once on the companies income at the end of the year and then I would have to pay tax on the income I gained from the company.

hargaden said:

I could do that but I thought if I took money out of the company I would be subject to tax twice. Once on the companies income at the end of the year and then I would have to pay tax on the income I gained from the company.

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You're right. On extracting the money from the company as income you'd be subject to tax at your marginal rate.

There has been lots of previous discussion on the (pro's and) con's of setting up a Ltd Company vs. Sole Trader on AAM should this be something you are considering. I don't believe it would be of a benefit given your current situation, but if in doubt do fully investigate the option.

Can't give a personal suggestion to the original question, but you might be surprised how much you could gain from professional tax advice. Given your personal circumstances (higher rate of tax, additional income, etc.) lots of scope for them to provide some money saving advice.

Satanta said:

You're right. On extracting the money from the company as income you'd be subject to tax at your marginal rate.

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Extractions in the form of salary or fees are tax-deductible for corporation tax purposes. There should be no double taxation of the same income unless the OP makes a mess of their situation.