Corporation Tax on Limited Company

[kingcook]

Have i got this right....

CT is payable on company profits after business expenses, so i'm assuming my own wage is a business expense.

So... as long as i pay me my wage using all money that the company has (hence £0 company profit), i won't actually pay any corporation tax?

[sweetandsour]

Have i got this right....

CT is payable on company profits after business expenses, so i'm assuming my own wage is a business expense.

So... as long as i pay me my wage using all money that the company has (hence £0 company profit), i won't actually pay any corporation tax?

If you are going to do that then you might as well use an umbrella company instead.

[kingcook]

But with my own ltd co, i can register on the VAT flat rate scheme, and earn extra money from that.

Also i've read something about claiming 5% of annual turnover for admin fees?? (need to read up more on that - unless someone here can tell me)

[sweetandsour]

But with my own ltd co, i can register on the VAT flat rate scheme, and earn extra money from that.

Also i've read something about claiming 5% of annual turnover for admin fees?? (need to read up more on that - unless someone here can tell me)

Taking all the money as salary is not the most tax efficient approach. But if you want to do that then you are correct - you will not have any CT to pay.

Do you have an accountant?

[kingcook]

Sorry, i should have said that i'm assuming that i'll be within IR35. Obvioulsy, if/when i get a contract that is outside IR35, then i'll be looking at taking money as dividends.

Nope - not got an account. Going to be doing it myself (i have previous experience of book keeping and VAT).

Thanks

[Moscow Mule]

Don't forget to factor NI (Both employer & employee) in you calculations.

[kingcook]

Probably going to buy Sage Payroll, that should be able to do the math (for NI)

[sweetandsour]

Since you are posting on here to ask a group of random strangers questions like this

Have i got this right....

CT is payable on company profits after business expenses, so i'm assuming my own wage is a business expense.

So... as long as i pay me my wage using all money that the company has (hence £0 company profit), i won't actually pay any corporation tax?

Are you sure this is a good idea?

Nope - not got an account. Going to be doing it myself (i have previous experience of book keeping and VAT).

Thanks

Book keeping and VAT are easy. Corporation Tax is not. You wont have any corporation tax to pay if you pay yourself everything as salary but you will still need to do the calculations and returns.

[Clare@InTouch]

If you're inside IR35 then you take the total value of your cash received during the year, less 5% for admin costs, less pension contributions and motor & travel (assuming 24 month rule OK) and the balance goes as wages plus employers NI.

This can still sometimes mean there is taxable profit as CT is calulated on an accruals basis (so what you've invoiced regardless of whether it's paid) whereas IR35 is calculated on a cash basis.

If you're looking to keep taxes low, pension contributions are usually a good idea.

However, I'd suggest you get an accountant even if it's just to check your year end accounts and IR35 calculation.

[kingcook]

Hmmmm... maybe it would be worth getting an accountant at least for now