Annual Returns - few queries

[ASB]

Have you setup the online services? The easiest thing is to log on to there and it'll show you the dates for returns and what you owe. I've always got an acknowledgement with the required payment in the post a few weeks after submitting the CT600 PDF.

Most people here just sign whatever their accountants put in front of them with no idea what it is, so don't take it too personally.

Wandering somewhat off topic...

In the dim and distant past myCo has a set of accountants. This was in the days of ACT on dividends. So every now and then the accountant said "sign this and send it with a cheques for the ACT", "sign this annual accounts" etc etc.

I dutifully obliged. Obviously this was all before any form of self asessement so that what was submitted was actually agreed.

Then after about 6 years (just before it would have become tax expired) I got a nice letter from the Tax Man. It was politely enquiring if he could have the 21,000 in Corp Tax that was owing, plus a chunk of interest etc.

In the ensuing telephone call with my accountants he learnt quite a lot of new words. It transpired he assumed that I understood the accounts and that I had simply decided not to pay for the time being. I had assumed that everything he asked me to pay was all that needed paying.

Needless to say we parted company on fairly bad terms. But it did teach me it would be sensible to have enough general accounting knowledge to be aware of what was going on.

[ASB]

I have not yet taken money out of the company simply because my income from permanent job meant that I have met my tax threshold. I will be taking dividends shortly.

Make sure you get the paperwork right and the dividend is minuted in the minutes and that there is sufficient retained profit for the dividend you declare (templates easily available on line). I suspect most people don't actually have the required meeting and minute it and the paperwork is often found down the back of the sofa at some later stage if it is ever required

Any, how much max. Basically it is your ongoing profit less obligations; this should give an indication of your retained profit. You'd get this easily enough from an accounting package, but

let's say you have invoiced 10,000 plus vat. Ignore the vat. Deduct everything you have paid out (tickets, hotels etc). Then deduct 20% for the corporation tax falling due (you don't actually have to do this despite what many say, but if you get bad debts or similar it could get embarassing). Then knock off another 15% or so for a safety margin.

You should be reasonably safe paying this as a dividend (if it later turns out it is too much then it's a bit of a headache but it is resolvable).

This would enable you to extract something whilst the accountant is working out the proper figures.

If you don't actually need the money then wait, but if you do - you[ve gotta eat the above number is reasonably safe. Also ensure that you take enough dividends to utilise all your basic rate allowance before the end of this tax year. If you don't want the money that's fine. It can just sit in your capital account in the company "on the books" as it were.

[Simon Howlader and Co]

2. Do I have to submit two CT600, (10th May 15 - 9th May 16, 10th May 16- 31st May 16)

Hi metallica,

As I hadn't seen anyone giving you a clear answer to this question, yes you will need to submit two Corporation Tax returns for the company's first year only for the dates that you have stated. A CT return cannot cover a period longer than 12 months (unlike company accounts submitted to Companies House, which can be longer), so in order to cover your company's first "year" from 10th May 15 to 31st May 16, you shall submit one return for the 12 months until 9th May 16, and then another small return for the remaining few weeks of May. The CT returns for following years will then cover the period for 1st June to 31st May.

Simon

[metallica]

Simon,

Thank a ton, precisely I was asking in relation to my situation for the first year. Your answer confirms my understanding.


ASB

Words of wisdom. Many thanks.

Yes I do plan to minute the dividends, plan to take first one this month. No salary to be taken for this financial year as my perm job met the personal tax threshold level.


Just a general unrelated question to my OP. How often you all take dividends - monthly, quarterly or as often as you need?

[SueEllen]

Yes I do plan to minute the dividends, plan to take first one this month. No s
Just a general unrelated question to my OP. How often you all take dividends - monthly, quarterly or as often as you need?

I declare dividends randomly.

You can declare them monthly, bi-monthly, quarterly, yearly, whatever as long as the company can cover all its other obligations e.g. VAT, CT, known expenses.

If you declare and take dividends monthly you need to ensure they are separate transactions from your wages.

You should do some more research as this tax year you want to ensure you declare as much dividends out as possible but staying within the lower tax band. Once reason why having an accountant would help you.

[Contreras]

Just a general unrelated question to my OP. How often you all take dividends - monthly, quarterly or as often as you need?

Whenever retained profit (plus safety margin) exceeds a certain threshold, typically 3 or 4 times per year and the same amount each time to keep the paperwork a breeze. Others will wait until after the accounts are made up and declare a single dividend (sum advised by their accountant) at the start of the financial year. Each to their own, there's no right way except that you keep it legal.

[northernladuk]

Just a general unrelated question to my OP. How often you all take dividends - monthly, quarterly or as often as you need?

As fast as possible making sure warchest is intact and tax liabilities are covered.

If you are a new contractor IMO you should take out just the minimum you need to live for the first 6 months or so and make the warchest number one priority. Once you've got something behind you then you can start to live a little. Bench time will hit and I've seen a lot of contractors crapping themselves because they haveblived the high life from day one.

After a year or two you should have enough to take out the max amount to stay under the threshold in one go the day after the new financial year starts. Stick it in a high interest account or offset mortgage so it's working harder than it is sitting in your business account.