Net 'Income' as Percentage of Turnover

[KennyG]

Rough figures - My Ltd Co's turnover for last year was £147K of which my Corporation Tax liability is £25K and my Income Tax liability is £17K. That means I 'keep' £105K of the £147K which is over 71%. Does this seem reasonable or do the Tax figures seem high in relation to turnover?

[moorfield]

How much income are you shifting to achieve that ?

[malvolio]

Rough figures - My Ltd Co's turnover for last year was £147K of which my Corporation Tax liability is £25K and my Income Tax liability is £17K. That means I 'keep' £105K of the £147K which is over 71%. Does this seem reasonable or do the Tax figures seem high in relation to turnover?

No. Got an accountant?

We need to understand how you worked the CT figure (it should be 20% of net profit, i.e. income after expenses which would be £22k to give your value, and that seems a little high but could be right. Tax is more complex since it depends what you pay yourself.

That said, somewhere around 70% net return on turnover is right if you haven't gone into higher rate, which on those numbers seems unlikely

[tim123]

No. Got an accountant?

We need to understand how you worked the CT figure (it should be 20% of net profit, i.e. income after expenses which would be £22k to give your value, and that seems a little high but could be right. Tax is more complex since it depends what you pay yourself.

That said, somewhere around 70% net return on turnover is right if you haven't gone into higher rate, which on those numbers seems unlikely

And where did he say that he had someone to income share with?

tim

[tim123]

Back to the question:

IR35calc shows that for 147K turnover (requiring an hourly rate of 89ph) the tax deducted would be 32% or 47K, so you're about 5K under.

Of course, this could be because you have a different expense profile than the calculation assumes or because you have left some money in the company, or paid it into a pension?

Oh, these figures are for the current tax year, whilst most people are still working out last year's.

(And what the **** do you have to do to get 89ph?)

More pertinently, why is someone who turns-over 147K skimping on accountants fees? The bill for my services is in the post!

tim

[KennyG]

Thanks for the replies.

I do have someone I could in theory income share with - otherwise known as a wife.

I'm not sure where you get £89 per hour from. I have a good day rate but the hourly equivalent is a bit less than that.

And I never said I didn't have an Accountant - I do, just trying to get some other opinions on the subject.

[Ardesco]

Who is more likely to be correct?

1. A bunch of armchair warriors posting on a forums, who don't know any details of your finances.
2. Your CIMA qualified accountant who does this for a living and has access to all of your finances.

Answers on a postcard please

[KennyG]

I didn't ask if it was right or wrong, I asked if the net amount over turnover seemed reasonable.

[NotAllThere]

I'm not sure where you get £89 per hour from. I have a good day rate but the hourly equivalent is a bit less than that.

£147000 / 220 / 7.5 = £89 per hour.

[KennyG]

Your calculation is based on working 220 days per year which means I'd be taking the equivalent of over 8 weeks' holiday and even allowing for public holidays that's too many, plus an 8 hour day would be more realistic.