Paying dividends and leaving enough for the tax man

[ittony]

Is it all right for my company to pay a dividend at a rate which would leave not enough cash to cover my current corporation tax liability as long as that tax liability is covered by my outstanding invoices which I have no reason to doubt will be paid well before the tax is payable?

Thanks,
Tony.

[northernladuk]

I would guess as long as you have the cash at the end of the year then it's ok but that is just a guess. The question that does spring to mind though is do you need the extra money in the dividends so badly? Surely you are just robbing from Peter to pay Paul here and leaving yourself open to a cock up with your last invoice or something that will leave you in a bad position?

[ittony]

I would guess as long as you have the cash at the end of the year then it's ok but that is just a guess. The question that does spring to mind though is do you need the extra money in the dividends so badly? Surely you are just robbing from Peter to pay Paul here and leaving yourself open to a cock up with your last invoice or something that will leave you in a bad position?

I just want to lose as little as possible of this year's (personal) basic rate tax allowance.

Business was a bit slow last year but is looking a bit busier ahead. I'd hate to be paying top rate next year on money I could have had at basic rate this year.

[Clare@InTouch]

I just want to lose as little as possible of this year's (personal) basic rate tax allowance.

Business was a bit slow last year but is looking a bit busier ahead. I'd hate to be paying top rate next year on money I could have had at basic rate this year.

You could always declare a dividend but not actually take it. That way you'd still have enough money in the bank to pay the tax, and the company would simply owe you the value of the dividend (which you could take at a later date).

[Olly]

You could always declare a dividend but not actually take it. That way you'd still have enough money in the bank to pay the tax, and the company would simply owe you the value of the dividend (which you could take at a later date).

can you charge your Ltd interest too?

[malvolio]

can you charge your Ltd interest too?

Yes.

Next...

[Clare@InTouch]

can you charge your Ltd interest too?

Yes - but then you'd have to declare the interest as extra income on your tax return. Not really worth it - save CT but pay personally.

[Olly]

hmmmmmmmm
I borrowed a lot from my co for about 4 months (30K) but for the other 8 I was in credit a bit...let's say an average of 3K at any one time

Should I have offset (on equal interest terms) the two when calculating interest owed to Ltd?

I paid about 400 quid interest from what I remember. Ok I should be able to get 79% of that back at some time...but still

[ittony]

You could always declare a dividend but not actually take it. That way you'd still have enough money in the bank to pay the tax, and the company would simply owe you the value of the dividend (which you could take at a later date).

Would that work? I thought I'd actually have to receive this money in my personal account before 5th April in order for it to fall under my 2009/10 tax year? Certainly that the way I've always operated when totting up dividend income from other stocks and shares for my self assessment...

[PAH]

as long as that tax liability is covered by my outstanding invoices

What happens if for some reason the invoices don't get paid (say the agency goes bust due to directors withdrawing all the money ) and you can't therefore pay the tax?

Is it a case of the company becomes insolvent so can be closed and that's the end of the tax liability? This assumes HMRC understand the course of events and don't see it as tax evasion.