PAYE & Corporation Tax query

[TonusMaximus]

Hello all,

I was hoping someone might be able to point me in the right direction with my (potentially stupid) question regarding PAYE & CT.

Basically, I have been running my ltd company for three years and my third year end will be due at the end of August. I have been paying myself £650 approx a month this financial year to maximise my personal tax free allowance but my question is this:

Say I have 10K in the company bank when my year end is up at then end of August, can I then be cheeky and forecast/subtract the remaining PAYE salaray amounts I will be paying myself until the new financial year starts in April 2013 to mimise the amount of CT I have to pay for the company's third year? Or, is the year end a snapshot in time and any profit at that point must be subject to CT?

I hope this makes some sort of sense....

[Contreras]

No. Because it would be classed as a loan and not salary.

The company could possibly pay you a 'bonus' for work already done, followed by nil salary until the new tax year, but this would be open to question IMHO. Since it only defers the CT until the following year the net effect is zero anyway. Btw, at £650/mo. you will also have employer & employee NI to pay, just to mention in case you didn't realise.

[Waldorf]

It is a bit worrying that you are in your third year and you have no idea about the accounting and tax rules you should be following.

I assume that you do not have an accountant, so my best advice would be to get one asap, if you are potentially making a mess of this, I wonder what else you have got wrong?

[TonusMaximus]

Thanks for the reply - I suspected it wouldn't be possible. Regarding my salary though, I am actually paying myself £675 a month via PAYE which costs the company £35 a quarter in employer/employee contributions. I have to confess, I didn't consider whether the NI contributions would cancel out the benefit of this years additional tax free allowance. Last year, I was paying myself £600 a month and had no NI to pay (which was quite sweet).

I should probably get an accountant...

[TonusMaximus]

It is a bit worrying that you are in your third year and you have no idea about the accounting and tax rules you should be following.

I assume that you do not have an accountant, so my best advice would be to get one asap, if you are potentially making a mess of this, I wonder what else you have got wrong?

Yes you're probably right. I do however keep full records and have successfully managed my CT, PAYE, and Companies House commitments thus far but I am not privvy to all the little loopholes that may (or may not, as in this case) exist.

[captainham]

I do however keep full records and have successfully managed my CT, PAYE, and Companies House commitments thus far

Once you've passed your first HMRC audit/review, if/when that occurs, with flying colours then you can say you've successfully managed your affairs...but it sounds like you might need an accountant to help you get to that stage!