Re: Stop taking the p***
His company is incorporated, not himself. But I digress.
Somebody earning £50k a year costs the company £55,775 including Employer's NI. That person receives £36,775 after all deductions. That makes the effective tax rate 1 - 36775 / 55775 = 34%
A limited company contractor might take a small PAYE salary of £8,200 and receive £8,195 after deductions. The cost to the company is £8,205. The contractor also receive a dividend from the company. To make the cost to the company the same as in the PAYE example above, it will be (£55,775 - £8,205) * (1 - 19%) = £38,531. The first £2k is tax-free so the contractor has already received £10,195 without paying more than £5 in NI and nothing in tax. The contractor then pays 7.5% in dividend tax on £45k - £8.2k - £2k = £34,800. That is £2,610 in tax on that part. The 19% corporation tax taken off above is (£55,775 - £8,205) * 19% = £9,038.
The contractor receives £8,195 + £2,000 + £34,800 - £2,610 = £42,385. All in all a tax and NI cost of £5 + £2,610 + £9,038 = £11,653. The effective tax rate is 1 - 42385 / 55775 = 24%.
So around a 10% difference in tax. No, limited company contractors are not "paying the same" (if outside IR35).
Costs for bookeeping, equipment, travel etc gets taken out from the revenue left in the company. You do leave money in the company don't you? Because if you don't, it is at the brink of bankruptcy and not a going concern anymore. Also, under the Companies Act the directors of the company have an obligation to make contingency plans to restore capital and possibly dissolve the company if less than 50% of the share capital is left in the company, or else face personal liability to creditors, which would sort of defeat the purpose of limited liability.