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Do I really pay less tax as a limited company

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    #21
    Originally posted by jamesbrown View Post
    I guess I'm one of the "few"...
    Operating through their own ltd company doesn't suit everyone of course eg those workers who are on very short term contracts, those earning low incomes and those who simply cant be bothered with the hassle of owning a ltd company. So to operate via an Umbrella or operate as a Sole Trader are other options available.

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      #22
      Originally posted by Forbes Young View Post
      Yes - effective diagram. The % of take home remuneration for a contractor with net profits much lower (say around £40k) is much higher again compared to the figures shown in the diagram, due to the fact that no income tax on dividend income is payable until the £41k tax threshhold has been breached (so approx a £8k salary and £30k net dividends can be taken without paying any income tax).
      I think (?) that this is picked up in the diagram. There's a worked example in the book, the contractor's night job.
      Last edited by cojak; 30 December 2014, 07:53. Reason: removed book promoting link.

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        #23
        Lets say I earn 100k the 1st year and pay myself the 40k or so and the company pays 20% of 92k. If I don't work the next year what is the max can I pay myself leaving no funds left in the bank?

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          #24
          Originally posted by ItRYmyBEst View Post
          Lets say I earn 100k the 1st year and pay myself the 40k or so and the company pays 20% of 92k. If I don't work the next year what is the max can I pay myself leaving no funds left in the bank?
          The company will pay 20% of the 100k, then you take your dividends etc from that
          So 80k is left, you take 10,000 salary + 32k dividends (or whatever it is)
          That leaves 38,000

          You could just have the full 38000 the following April when the new tax year starts. If I'm reading your post right.
          ⭐️ Gold Star Contractor

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            #25
            Originally posted by PerfectStorm View Post
            The company will pay 20% of the 100k, then you take your dividends etc from that
            So 80k is left, you take 10,000 salary + 32k dividends (or whatever it is)
            That leaves 38,000

            You could just have the full 38000 the following April when the new tax year starts. If I'm reading your post right.
            Salary is pre tax, not post tax.

            £10k salary, £18k CT, £32k ish dividends. £40k profit remaining to take the following year. £82k take home over two years.

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              #26
              Originally posted by TheCyclingProgrammer View Post
              Salary is pre tax, not post tax.

              £10k salary, £18k CT, £32k ish dividends. £40k profit remaining to take the following year. £82k take home over two years.
              Well thanks all, its working out nicely!

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                #27
                Originally posted by ItRYmyBEst View Post
                Lets say I earn 100k the 1st year and pay myself the 40k or so and the company pays 20% of 92k. If I don't work the next year what is the max can I pay myself leaving no funds left in the bank?
                Better budget for 25k earnings given the level of competence you've shown so far...

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                  #28
                  Originally posted by stek View Post
                  Better budget for 25k earnings given the level of competence you've shown so far...
                  Well I did better than that. This business stuff is hard and it takes some people a lot of time to understand it.

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                    #29
                    Originally posted by ItRYmyBEst View Post
                    Well I did better than that. This business stuff is hard and it takes some people a lot of time to understand it.
                    Quick guide:

                    Year 1 Earn more money
                    Result - you have more money
                    Year 2 Earn less money
                    Result - you have less money

                    It's simple.
                    Join Big Group - don't let them get away with it
                    http://www.wttbiggroup.co.uk/

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                      #30
                      Originally posted by flamel View Post
                      Quick guide:

                      Year 1 Earn more money
                      Result - you have more money
                      Year 2 Earn less money
                      Result - you have less money

                      It's simple.
                      Ok , I get it.

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