Offsetting funds against your mortgage from business account

[Crossroads]

I run my own books, do my own accounting, sort everything out myself (pretty much)..

I thought I only paid CT on any dividends paid out, I didn't realise that if I just left profit in my account it had to have CT tax paid at the end of the company year.

I recommend you consult a professional to find out what else you might have missed.

[TheFaQQer]

Right I'm with you, I thought I only paid CT on any dividends paid out, I didn't realise that if I just left profit in my account it had to have CT tax paid at the end of the company year.

What happens if I decide to pay out a dividend next year, from this years profits, I take it I just pay the whole dividend but without any CT deductions as this has already been paid?

You can pay a dividend out of retained profit. Once you have paid corporation tax on the profit first time round, there is no more tax to pay on that profit. But any income you make from the retained profit (e.g. from interest) will incur corporation tax.

Sounds like you need to read some of the getting started guides - either here, SJD, PCG or all of them, and also speak to an accountant about what tax you need to be paying.

[moorfield]

The easiest way is probably to extract money against directors loan a/c - upto a max £5k I think - and put it into your offset. But the saving you'll make on your mortgage payments over a year will be marginal.

[TheFaQQer]

The easiest way is probably to extract money against directors loan a/c - upto a max £5k I think - and put it into your offset. But the saving you'll make on your mortgage payments over a year will be marginal.

And it needs to be repaid before the end of the year otherwise it gets treated like a BIK.

[ittony]

My company's first Accounting Reference Date is coming up at the end of the month, is there any financial imperative to pay dividends before then (I haven't paid any yet) or is it safe to pay one out of retained profit in the company's next tax year, without losing out?

Thanks, T.

[VectraMan]

My company's first Accounting Reference Date is coming up at the end of the month, is there any financial imperative to pay dividends before then (I haven't paid any yet) or is it safe to pay one out of retained profit in the company's next tax year, without losing out?

No. And ideally you should wait until after you get the final figures for the year.

[TheFaQQer]

is it safe to pay one out of retained profit in the company's next tax year, without losing out?

Thanks, T.

Yes - that's the safest way, since you know what the profit for the year has been, and can then pay a dividend out of that.

[ittony]

Thanks TheFaQQer and VectraMan, that makes sense.

I'm going to see if I can cheekily sting you for some more information about a related end of year matter though, which is this...

According to Hector my company's first "accounting period end date" is mid this month, a year less a day after its incorporation, but my Companies House "Accounting Reference Date" is the last day of the month with a "Next Return Due" date a week after that, which leads me to ask; 1. What gives? Doesn't this double the amount of work I have to do and mean that my corporation tax paid does not match the profit on my annual return; and 2. Do I really only have 7 days to work out and submit my accounts to Companies House?

Thanks again, T.

[r0bly0ns]

We had the same situation earlier in the year. In real terms, all it means is that you will get 2 letters for some things instead of one, but the CT will still only be paid in one go.

Accounts will not be due yet, you get a few months grace for this, speak to your accountant who will be able to confirm everything.