Originally posted by derekM
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Retained profit in the next financial year
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Originally posted by derekM View PostAnd further to this, is it fair to say, in any given year, dividends can be extracted from "last years retained profit" + "this years profit"
However there are some examples where you may not have the cash in the company to payout all the retained profit as a dividend.
A simple example would be if you had say retained profits of £100,000 but had splashed out £25K on a company car, although the profits would still show at £100K, the cash available would now only be £75K - a simple example but hopefully it shows that profits are not always the same as cash in the bank!
Hope this helps.
AlanComment
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Here are somethings to think about:
1. Are you married and does your spouse have employment income or is she a housewife (possibility of paying her divi's)
2. Insurances (can your company pay for the premiums - Speak to your FA or accountant)
3. Nothing stopping you taking more money out of the company as divi's if you need it. Just make sure you are aware of the personal tax implications.
4. If you don't need to go into the higher rate tax bracket leave it in the company, roll it over to the next tax year.
5. Can your company make investments? Stocks, bonds, gold, property etc...
6. Can you increase your pension contributions? Speak to your providerComment
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Originally posted by pmeswani View PostI learn something new every day. If there is no corp tax to pay on retain profits, then I agree with this view.
There are no additional taxes to pay if you are a basic rate tax payer as the corp tax you will already have paid on the profits retained or otherwise.Comment
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Originally posted by Stag Cozier View PostHere are somethings to think about:
1. Are you married and does your spouse have employment income or is she a housewife (possibility of paying her divi's)
Originally posted by Stag Cozier View Post2. Insurances (can your company pay for the premiums - Speak to your FA or accountant)
Originally posted by Stag Cozier View Post3. Nothing stopping you taking more money out of the company as divi's if you need it. Just make sure you are aware of the personal tax implications.
4. If you don't need to go into the higher rate tax bracket leave it in the company, roll it over to the next tax year.
Originally posted by Stag Cozier View Post5. Can your company make investments? Stocks, bonds, gold, property etc...
Originally posted by Stag Cozier View Post6. Can you increase your pension contributions? Speak to your provider
Thanks for putting so much thought into your post, much appreciated!Comment
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Originally posted by escapeUK View PostIm not sure if you have misunderstood something there.
There are no additional taxes to pay if you are a basic rate tax payer as the corp tax you will already have paid on the profits retained or otherwise.If your company is the best place to work in, for a mere £500 p/d, you can advertise here.Comment
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Originally posted by derekM View Post
What insurances are you talking about? my company already pays for various professional insurances.
Nope, don't want company reclassified as an investment vehicle.
It's unlikely that your company will be classed as an investment vehicle unless you plan to investment more than 20%.Comment
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Originally posted by derekM View PostAnd further to this, is it fair to say, in any given year, dividends can be extracted from "last years retained profit" + "this years profit"
QB.Comment
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Originally posted by QwertyBerty View PostAt the start of each financial year "last year's retained profit" becomes the opening balance for the new year's retained profit. Therefore there's no need to keep referring to "last years retained profit"... you simply look at retained profit now and draw your dividends against that.
QB.Comment
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