Tax on retained profit

[jubilee]

Hi there

I haven't been able to find an existing thread that clearly answers paying CT on retained profit.

Scenario...

In an accounting year you make £80K
- You decide for tax reasons to pay yourself £7K PAYE.
- In order to keep CT down, you also then decide to take a dividend for £20K to not exceed the basic rate tax limit)
- That leaves £53k retained in the Company (80-7-20 = £53K)

Are you liable to pay any form of tax on the £53K, given you have decided to not taken it out in the form of PAYE or Dividends?

Thanks

[Clare@InTouch]

Income tax? No.

CT - yes, on the profit before dividends.

[Craig@Clarity]

The basic maths behind this is:

Turnover = £80k
Less PAYE (Gross salary) = £7k
Net profit = £73k

CT @ 20% on profit = £14.6k

Retained profits = £58.4k

Retained profits is where you then take divi's from as Clare mentioned.

[northernladuk]

Please please please please tell me you have an accountant or are just about to get one!!!!

EDIT : Your posting history makes from grim reading. You have had a LTD since 2011 and you have to ask when SA's are due. In 2012 you didn't know the difference between dividends and salary and now you don't even know how to account for dividends. You have got to be a troll, a poor one at that.

[stek]

Please please please please tell me you have an accountant or are just about to get one!!!!

EDIT : Your posting history makes from grim reading. You have had a LTD since 2011 and you have to ask when SA's are due. In 2012 you didn't know the difference between dividends and salary and now you don't even know how to account for dividends. You have got to be a troll, a poor one at that.

...or spent the money!

[SimonMac]

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[kingcook]

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[SueEllen]

Current:
Taking a break

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[AtW]

As others have said, I think you need an accountant, this guy comes recommended

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There might be a few years waiting period ...

[mudskipper]

There might be a few years waiting period ...

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