Ltd company ... things needed??

[skelm]

So now do you see why I said

You earn money. Some of it is wages, some is divis. You are liable for tax on your personal income. You are a company director so you have to complete an annual SA return. It's not hard to undertstand...

Thanks for the above. I understand your frustrations of replying to newbie questions. I guess rather than ask IF i needed to do a SA, what I really wanted was to get an idea if there was a % assigned to it.

Example:
My personal income would be my salary ( £5435 attracting 0% tax ) + dividends. Plan is to take dividends below threshold of £39825, therefore potentially I could have around 30900 in dividends ( 90% of 39825-5435 ) +-Interest accrued etc.

My question being my total personal income then is 36335. Does that mean there is a set % on this amount that i would have to pay when doing a SA on this, or it ir a case that salary attracts 0% tax and dividends 10% is paid in form of CT so there is very little to be paid when a SA is done.

Please note this is just an example .... so please go easy if there a flaws to the thought process. Assumption being no rental income or any other forms of income. Purely salary and dividends.

I await to slaughtering to commence!

[malvolio]

Jeez, you really don't want to listen do you?

The answer to your question is "Yes".

OK now?

[skelm]

Jeez, you really don't want to listen do you?

The answer to your question is "Yes".

OK now?

You really cannot read can you?

Where in the above question just posted can you answer yes to?

[malvolio]

Thud...thud...thud....

There comes a point where it's not worth trying any more. One last attempt, then will you go away and do what you've been told to do? If you can't undertsand this simple point, there's a huge amount more you don't know either, and that will get you into trouble.

You don't pay tax on your tax-free allowance. The base tax rate in the UK is 20%. That means you pay 20% on everything you earn from your allowance up to the higher rate point, after which you pay 40%. You also pay NICs on all your income, other than dividend income, at varying rates but say 12% on average (it's not but I can't be arsed to look it up). That means on your numbers you pay around 32% tax on everything you pay yourself.

But hey, you've got until September at the earliest to fill out an SA form . Perhaps by then you will have learned something - but I'm not holding out too much hope...

[xoggoth]

Normally you should register for CT once the company starts trading.

[RichardCranium]

... My question being my total personal income then is 36335. Does that mean there is a set % on this amount that i would have to pay when doing a SA on this, or it ir a case that salary attracts 0% tax and dividends 10% is paid in form of CT so there is very little to be paid when a SA is done.

You really cannot read can you?

Where in the above question just posted can you answer yes to?

In the question you asked?

I await to slaughtering to commence!

Just as well!

[ASB]

Thanks for the above. I understand your frustrations of replying to newbie questions. I guess rather than ask IF i needed to do a SA, what I really wanted was to get an idea if there was a % assigned to it.

Example:
My personal income would be my salary ( £5435 attracting 0% tax ) + dividends. Plan is to take dividends below threshold of £39825, therefore potentially I could have around 30900 in dividends ( 90% of 39825-5435 ) +-Interest accrued etc.

My question being my total personal income then is 36335. Does that mean there is a set % on this amount that i would have to pay when doing a SA on this, or it ir a case that salary attracts 0% tax and dividends 10% is paid in form of CT so there is very little to be paid when a SA is done.

Please note this is just an example .... so please go easy if there a flaws to the thought process. Assumption being no rental income or any other forms of income. Purely salary and dividends.

I await to slaughtering to commence!

On the grounds that you have grasped the 90% bit I am assuming you have worked out the slightly weird concept of notional tax on dividends you don't need slaughtering.

The answer to your question is "sort of yes". The actuality is that rates are apllied at various amounts depending upon how the income is derived, from this what has alredey been paid (or the tax credit in the case of dividends) is deducted.

So the upshot of all this is:

If your only income is the salary and dividends and the PAYE on the salary was operated correctly then there will be no extra tax to pay on the basic rate amount

i.e. salary + dividends * 10/9 > tax free amount (your coding * 10) + basic rate band (under most circumstances this gives a number around 40,000).

Assuming your salary is < 40,000 then dividends above the combined threshold above will require to pay 25% of the net received.

HMRC tax return software allows you to create a notional return and not file it. This enables you to do a whole bunch of scenarios if you feel inclined.

[skelm]

ASB .... many many thanks for this. I appreciate the effort and patience. Makes much more sense now.

[lambrini_socialist]

Plan is to take dividends below threshold of £39825

this is the thing i don't understand - are all you MyCo owners only taking out enough cash to keep you just below the higher rate of tax? if so, how do you afford to live? i realise you can push some money into expenses, pensions, capital purchases etc, but still, only taking home <£40k doesn't make sense to me. (my first LtdCo invoice is about to pay so this stuff is on my mind a lot at the moment....)

[ASB]

this is the thing i don't understand - are all you MyCo owners only taking out enough cash to keep you just below the higher rate of tax? if so, how do you afford to live? i realise you can push some money into expenses, pensions, capital purchases etc, but still, only taking home <£40k doesn't make sense to me. (my first LtdCo invoice is about to pay so this stuff is on my mind a lot at the moment....)

I don't know. You might like to ask the question to the approximately 80% of the population with household incomes < 40k gross. (avg 30k net).