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can someone please clarify these doubts that i have of qn 3 june2015 paper
when a business is incorporated is it no longer self employment?
And the remuneration given of $18000, why is class 1 of NIC calculated. Isnt he the owner of the business?
When an unincorporated trader incorporates their business the individual becomes an owner manager of their company. The company is then charged to corporation tax on its adjusted trading profit and the individual is charged to income tax on the salary paid to him / her by the company, hence the remuneration you state above has class 1 employee NIC imposed upon it, as it is a salary – the company will also have to pay employers class 1 NIC.
The owner may also pay themselves a dividend which is not tax deductible for the company but is of course taxed as dividend income for the owner.
The company is a separate taxable person to the individual.
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