thanks for replies so far. Still a bit confused by this - be great if someone could clarify.
In a nutshell -
1. will earn approx 6.5k in March, and have over 7k personal tax earnings allowance left in this current tax year until i hit the circa 38k upper 40% tax limit. (PAYE permie job for first half of year then time off until last month)
2. Paid via brolly currently, but they won't receive funds from my agency for March work until after April 6th, so say they will class it as next years tax year when they pay me. This means i can't use my remaining tax allowance, so i will pay full whack tax, not just lower rate.
3. If i set-up a ltd company and cut the brolly out of the equation, is there a
way to pay myself this money in this tax year? I can invoice the agency on 1st April for March's money (ie this tax year, for work done in this tax year), but cleared funds won't reach my business bank account until the new tax year. I can loan the business bank account money if necessary, but otherwise there won't be any money at all in the account until i get paid around April 10th
I don't care if this is dividend or all salary etc if this is possible, just want to be able to make use of my remaining 06/07 lower tax allowance.....
Realise the above replies may have answered this but if anyone can clarify in simple terms what my options are it would be great.... i am intending to go ltd anyway soon but will do this now if it's beneficial for the above...
- Visitors can check out the Forum FAQ by clicking this link. You have to register before you can post: click the REGISTER link above to proceed. To start viewing messages, select the forum that you want to visit from the selection below. View our Forum Privacy Policy.
- Want to receive the latest contracting news and advice straight to your inbox? Sign up to the ContractorUK newsletter here. Every sign up will also be entered into a draw to WIN £100 Amazon vouchers!
Reply to: last month of tax year - query
Collapse
You are not logged in or you do not have permission to access this page. This could be due to one of several reasons:
- You are not logged in. If you are already registered, fill in the form below to log in, or follow the "Sign Up" link to register a new account.
- You may not have sufficient privileges to access this page. Are you trying to edit someone else's post, access administrative features or some other privileged system?
- If you are trying to post, the administrator may have disabled your account, or it may be awaiting activation.
Logging in...
Previously on "last month of tax year - query"
Collapse
-
Originally posted by oraclesmithAren't there some tax implications of having a non-zero DLA at the end of the tax year ?
If it is in debit that is a different matter.
Leave a comment:
-
Aren't there some tax implications of having a non-zero DLA at the end of the tax year ?
Leave a comment:
-
Originally posted by Mr_ZThanks. Excuse my ignorance but March will be the first month i work (and trade as a limited company if i decide to do this). Therefore the money the agency pays me in April will be the first payment into the business a/c. If i declare a dividend etc before the end of the tax year will there have to already be money in the business account to cover it?
May be a daft question....but i'll ask it anyway!
When the dividend is declared this is credited to the directors current account and you simply become a creditor. From a view of the date you can find some guidance on HMRC webtulipe, however since it is a dividend not salary then it is the date of declaration that is relevant.Last edited by ASB; 1 March 2007, 11:44.
Leave a comment:
-
You must have sufficient profit to make the divi legal and it must be actually paid in this tax year to count as this years income. What you are asking is if an invoice issued in this financial year is sufficient evidence of profit to warrant paying a dividend.
I don't know the exact answer - but I doubt it would be feasible because although you have a sale and therefore a credit in your trading account, the company doesn't actually have money in the bank to make the payment in the current tax year - unless it took out a loan. Ie. it doesn't have accumulated realised profits. Anyhow, I doubt whether the Board of a regular company would attempt to issue dividends on the strength of owed money.
As I understand it, the shareholder must actually receive the money in the tax year in which they regard it as income.
In my opinion.
Leave a comment:
-
Originally posted by Nixon WilliamsFor a personal perspective the dates that are important are the dates the salary/dividends are payable, if these are in 2006/07 then these will be included in the current tax year.
May be a daft question....but i'll ask it anyway!
Leave a comment:
-
You can declare a dividend equating to your profits. To simplify this I would take your day rate multiplied by the number of days you work between now and 05/04/06. Then deduct any expenses incurred in this period (remembering that it is beneficial to minimise these, assuming you are correct that any consequent dividend will fall below the higher rate tax threshold). Then take 81% of this figure and declare this (with supporting documentation) as a dividend.
Just to clarify, I assume that your salary for YTD plus any other income plus (your dividend x 100/90) will not exceed £38,335. Otherwise the limiting factor should be the maximum dividend in this equation. ie X = 90% x [£38,335 - salary YTD - any other income (gross)]
Leave a comment:
-
For a personal perspective the dates that are important are the dates the salary/dividends are payable, if these are in 2006/07 then these will be included in the current tax year.
Leave a comment:
-
I was under the impression that the date for tax purposes was the date of the invoice and not the actual payment date. I'd raise the invoice this year, dated as such on your accounts.
I must add though that I'm not an accountant so YMMV...
Leave a comment:
-
last month of tax year - query
Hi
Would appreciate some advice on this. Just started a contract and having taken some time off this year have only worked max 6 months of the current tax year (in a permie role).
As my agency have a monthly payroll, payment for my March work will only be made in the second week of April, with me able to invoice after 1st April.
If i do this through a limited company, will i be able to class this as 2006/7 earnings for the purposes of taxation?
Umbrella co's are telling me it will be classed as next years earnings because they won't be paid by my agency until the new tax year starts.
Having not worked for much of this current year it's advantageous to me to class this as this years earnings because i won't quite have reached the upper tax threshold yet.
Any help/advice appreciated.Tags: None
- Home
- News & Features
- First Timers
- IR35 / S660 / BN66
- Employee Benefit Trusts
- Agency Workers Regulations
- MSC Legislation
- Limited Companies
- Dividends
- Umbrella Company
- VAT / Flat Rate VAT
- Job News & Guides
- Money News & Guides
- Guide to Contracts
- Successful Contracting
- Contracting Overseas
- Contractor Calculators
- MVL
- Contractor Expenses
Advertisers
Contractor Services
CUK News
- Streamline Your Retirement with iSIPP: A Solution for Contractor Pensions Sep 1 09:13
- Making the most of pension lump sums: overview for contractors Sep 1 08:36
- Umbrella company tribunal cases are opening up; are your wages subject to unlawful deductions, too? Aug 31 08:38
- Contractors, relabelling 'labour' as 'services' to appear 'fully contracted out' won't dupe IR35 inspectors Aug 31 08:30
- How often does HMRC check tax returns? Aug 30 08:27
- Work-life balance as an IT contractor: 5 top tips from a tech recruiter Aug 30 08:20
- Autumn Statement 2023 tipped to prioritise mental health, in a boost for UK workplaces Aug 29 08:33
- Final reminder for contractors to respond to the umbrella consultation (closing today) Aug 29 08:09
- Top 5 most in demand cyber security contract roles Aug 25 08:38
- Changes to the right to request flexible working are incoming, but how will contractors be affected? Aug 24 08:25
Leave a comment: