Claiming expenses from Dividend Tax

[norush]

Hi Folks

I have been a contractor now for several Yrs. Have been messed about by the "Company I work through" for a while.
I was originally through an umbrella. Then a sole Trader, Then Ltd company Through an agency and now a Limited Company in partnership with a colleague that I work alongside.

All these changes were forced upon us.

Anyway to the point.

We are paying ourselves Minimum wages and the rest in dividends.
I wish to purchase items for work to make life easier to do my job. The person I work with I think is looking to retire next year (He is older than me) So he wants to spend nothing.

I will need to do a personal tax return at the end of the Year.
If I purchase items, Obviously I cannot claim any tax back on earnings as I will not have paid any.
I will however have quite a bit of Tax to pay on Dividends on my return.

Is this all lumped together on the return and will I be able to claim items as expenses even though the Tax has been charged on the Dividends.

Any advice appreciated

[Cirrus]

Time to stop avoiding issues

Any advice appreciated

Get out the Company Cheque Book and buy the items you want.

[FrontEnder]

Hi Folks

I have been a contractor now for several Yrs. Have been messed about by the "Company I work through" for a while.
I was originally through an umbrella. Then a sole Trader, Then Ltd company Through an agency and now a Limited Company in partnership with a colleague that I work alongside.

All these changes were forced upon us.

Anyway to the point.

We are paying ourselves Minimum wages and the rest in dividends.
I wish to purchase items for work to make life easier to do my job. The person I work with I think is looking to retire next year (He is older than me) So he wants to spend nothing.

I will need to do a personal tax return at the end of the Year.
If I purchase items, Obviously I cannot claim any tax back on earnings as I will not have paid any.
I will however have quite a bit of Tax to pay on Dividends on my return.

Is this all lumped together on the return and will I be able to claim items as expenses even though the Tax has been charged on the Dividends.

Any advice appreciated

This is one reason why running a limited between 2 contractors is a terrible idea. How is it possible this was "forced upon" you?

I'd be looking to get out of this arrangement and set up your own limited.

This is very different to how most people on here probably operate, so you should really be seeking professional advice. Or in other words:

Get an accountant

[missinggreenfields]

I wish to purchase items for work to make life easier to do my job. The person I work with I think is looking to retire next year (He is older than me) So he wants to spend nothing.

Start a new company without him. Loan the company some seed money and buy the things that you need to buy for the company. Repay the loan when you are working through the company.

And consider very carefully in the future your personal and business relationships.

[Lance]

I wish to purchase items for work to make life easier to do my job. The person I work with I think is looking to retire next year (He is older than me) So he wants to spend nothing.

I will need to do a personal tax return at the end of the Year.
If I purchase items, Obviously I cannot claim any tax back on earnings as I will not have paid any.
I will however have quite a bit of Tax to pay on Dividends on my return.

Is this all lumped together on the return and will I be able to claim items as expenses even though the Tax has been charged on the Dividends.

I take it this is a new LTD company started this tax year.
First thing. If you pay yourself minimum wage then you WILL pay tax on those earnings. Most LTD contractors pay themselves well below minimum wage. So it might be easier than you think.
However.... You will need an accountant to do the company books, so use them for professional advice.
I would not recommend using SA to claim back tax in the way you describe as it's not the usual way for a LTD contractor and HMRC may well spot it as unusual and come looking for more. If it's a genuine business expense then your business partner should have no issue with it. Start the argument.
And as other have said.... Get out of this arrangement... It will almost certainly go wrong in an acrimonious fashion.

[northernladuk]

What items are 'items for work to make my life easier'?

You've got to be very clear what is wholly for the business and what is nice to have and you can use it at work.

Clearing that up may mean you don't need to put it all through the company and the problem gets smaller?

But as mentioned, surely your accountant that is fully versed with what appears to be a pretty complicated setup would be a better first stop.

[LondonManc]

Of greater concern is what happens when the other partner retires - are you simply going to be able to buy his share capital for a nominal fee?

[northernladuk]

I'm a little confused how all of those can be 'forced' on to you. One or two of them maybe... But All?

[Lance]

I'm a little confused how all of those can be 'forced' on to you. One or two of them maybe... But All?

I can understand being 'forced' from sole trader as most agencies won't touch them.
The relationship with the partner is a really weird one unless the partner got the OP to do all the work but split the money.

[MrMarkyMark]

I can understand being 'forced' from sole trader as most agencies won't touch them.
The relationship with the partner is a really weird one unless the partner got the OP to do all the work but split the money.

I'm actually for a similar arrangement to that for myself.