Hi
I posted a previously thread regarding Warchests which I got some replies on , However the real question was how you "keep" the money in the company. I`ve built up a warchest by max-ing my pay and Div`s being split between myself and partner so reduced tax . The real question I had was that any Div`s are paid out after paying Corp Tax as we know however if you have surplus money in the company and have the happy option of either going above the higher tax threshold or keeping money in the company- where do you keep this money
1. Pay Corp Tax but hold back on paying the full Div`s until you need it -Corp Tax already paid
2. Keep the same amount back in the company as retained money i.e not liable to Corp Tax
option 2
Income £1000
Expenses
Wages £200
Mobile£50
Account £100
Total £350
Remaining £650
Corp tax £650 * 20%
£130 to HRMC
Divs split 650-£130
£ 520
Now rather then keep say 10% of the divs in the company to which you have already aid tax on , can you keep it as "Expense"
Income £1000
Expenses
Wages £200
Mobile£50
Account £100
Rainy day £200
Total £550
Remaining £450
Corp tax £450 * 20%
£90 to HRMC
Divs split £450-£90
£ 360
The idea being that the rainy day amount will be used to pay your "wages". Say you need to have £1000 per month to live and currently your wages - minium and DIVS covers this , but when you are out of work you increase your wage to £1000 amount which is taken from your rainy day- not with standing any incase NI contributions etc. When I'm back in work reduce the wage back to the minium again?
I posted a previously thread regarding Warchests which I got some replies on , However the real question was how you "keep" the money in the company. I`ve built up a warchest by max-ing my pay and Div`s being split between myself and partner so reduced tax . The real question I had was that any Div`s are paid out after paying Corp Tax as we know however if you have surplus money in the company and have the happy option of either going above the higher tax threshold or keeping money in the company- where do you keep this money
1. Pay Corp Tax but hold back on paying the full Div`s until you need it -Corp Tax already paid
2. Keep the same amount back in the company as retained money i.e not liable to Corp Tax
option 2
Income £1000
Expenses
Wages £200
Mobile£50
Account £100
Total £350
Remaining £650
Corp tax £650 * 20%
£130 to HRMC
Divs split 650-£130
£ 520
Now rather then keep say 10% of the divs in the company to which you have already aid tax on , can you keep it as "Expense"
Income £1000
Expenses
Wages £200
Mobile£50
Account £100
Rainy day £200
Total £550
Remaining £450
Corp tax £450 * 20%
£90 to HRMC
Divs split £450-£90
£ 360
The idea being that the rainy day amount will be used to pay your "wages". Say you need to have £1000 per month to live and currently your wages - minium and DIVS covers this , but when you are out of work you increase your wage to £1000 amount which is taken from your rainy day- not with standing any incase NI contributions etc. When I'm back in work reduce the wage back to the minium again?
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