Approx % of profits lost to tax NI in a Ltd company?

[d000hg]

I am working on the basis of being outside IR35, as advised by my accountant. I am taking a salary of £900 gross per month, and it looks like that will work out at ~ 1/3 going on PAYE, employer and employee NI.

So what is the total % I would expect to lose on dividends I take... I guess the part under and over the upper tax incurs different rates?
My thoughts were that under the threshold, I pay no personal tax but the company profit is taxed at ~20%, is that right?
Does a company get the first £X,000 tax free or are all company profits taxed at a flat rate?

Thanks.

[dude69]

I am working on the basis of being outside IR35, as advised by my accountant. I am taking a salary of £900 gross per month, and it looks like that will work out at ~ 1/3 going on PAYE, employer and employee NI.

So what is the total % I would expect to lose on dividends I take... I guess the part under and over the upper tax incurs different rates?
My thoughts were that under the threshold, I pay no personal tax but the company profit is taxed at ~20%, is that right?
Does a company get the first £X,000 tax free or are all company profits taxed at a flat rate?

Thanks.

20% CT on all profits. Going up to 21% then 22% in 2 years. No tax-free amount.

For the last year I billed £120k before VAT. I kept £2.5k from flat rate VAT. I made £1500 interest. My expenses (tax-free: transport, 2 * salaries of £5,220, pensions) came to £21k. Profit was then £104k. I paid £20.5k Corporation Tax. Net profit after tax was therefore £83k. Wife and I received £60k in dividends. We therefore paid effectively £18k tax on £120k. That is 15%.

However, £23k left over, on which I will probably pay tax in the future. If I wanted to receive this today rather than leaving it in the company for the future, I would pay 25% income tax on that = 19.8% tax effective.

From next year, spouses can no longer receive dividends if they do not contribute to earning revenue. So then from next year, that's another £7,500 in income tax/year. That would then be 26% tax. If you did not pay yourself any pension (I paid £6k), then that's another £2,400 of tax = 28% tax overall.

[xoggoth]

Beats me why people bother. What an incentive-destroying system we have.

[d000hg]

Beats me why people bother. What an incentive-destroying system we have.

Yeah, coming home with £100K isn'r much of an incentive when I'd be looking at ~30K for a decent job in the North East.

[dude69]

just to add, your £9k salary will cost you about an 22.8%, for the NI, for all above £5.22k so that's a further £861.40 in tax

[thunderlizard]

Lost

It's not being "lost". It's being invested for your own good and the good of the country.

Alasdairlizard Thunderdarling.