2. Choice of trading style Will intends to start a new business from 6 April 2021 providing consultancy advice and anticipates that his profit for the year to 5 April 2022 will be 150,000. He is unsure as to whether to trade as a sole trader or set up a limited company. a) Prepare a brief note explaining why a limited company route may be most appropriate for Simon, ignoring any taxation issues. (2 marks) b) Calculate Simon's income tax, corporation tax and national insurance liabilities for 2021/22 if i. He trades as a sole trader ii. He establishes a limited company and is paid a salary of 8,000 per annum with the balance of all available aftertax profits distributed as a dividend to him. Clearly show the after-tax and NIC position for both options and state which is the most tax efficient. (11 marks) If a limited company is established, Will is considering issuing 4% of the shares to his daughter, Kate, a full-time student at university. c) Explain the possible tax advantages and disadvantages if Will's daughter owns 4% of the business. (4 marks) Will is considering transferring his car into the business. He expects that his annual business mileage will be 8,000 miles out of 20,000 total annual miles d) Explain how the car and motoring expenses will impact his income tax position under each trading option. (3 marks) Total: 20 marks