declaring dividends but not withdrawing

[ookook]

use the contractor calculator

do the advanced calculation - stick all the figures in to approximate earning 100K a year with expenses, directors salary, pension et al

look at the advanced breakdown / tax breakdown the calculator returns

that should give you an idea.

Alternatively do some searches on this site or get a good accountant

Do you have an accountant? They will explain and sort all this out for you, it really is a small price to pay for peace of mind.

Do a search there are a few that post on here, Nixon Williams SJD etc.

True I appreciate the wisdom in having an accountant for the peace of mind.But before going for SJD etc i wud like to have some knowledge myself on this one...any one to help?

[Bluebird]

Ok..Iam a newbie to contracting and have set up my own LTD.I have some basic questions which might be very helpful if someone explains the below.

For ease of all lets assume the LTD company made 100,000 in a year.

1) How much do i pay myself as a monthly salary in order to avoid tax or pay less tax
2) How much the company has to pay as tax(corp tax? 20%?)
3) What is the amount lost in VAT?
4) Is there an emploer NI that needs to go from the company account(which results in less amount of money left for dividends purpose?)
5) Finally how much tax,NI that the employee(I) need to be paying..
6) what is the amount of allowable expenses that is tax free

Can someone explain neatly with some figures assuming the company made 100K in a year and finally what would be the net profit?

Thanks
AJ

You say you are setting up a ltd company to avoid paying tax, it would seem therefore that you are probably caught by IR35 legislation which means that ALL your income is subject to PAYE.

Rough figures ? you can probably take home about 50%

[gingerjedi]

Ok..Iam a newbie to contracting and have set up my own LTD.I have some basic questions which might be very helpful if someone explains the below.

For ease of all lets assume the LTD company made 100,000 in a year.

1) How much do i pay myself as a monthly salary in order to avoid tax or pay less tax
2) How much the company has to pay as tax(corp tax? 20%?)
3) What is the amount lost in VAT?
4) Is there an emploer NI that needs to go from the company account(which results in less amount of money left for dividends purpose?)
5) Finally how much tax,NI that the employee(I) need to be paying..
6) what is the amount of allowable expenses that is tax free

Can someone explain neatly with some figures assuming the company made 100K in a year and finally what would be the net profit?

Thanks
AJ

Do you have an accountant? They will explain and sort all this out for you, it really is a small price to pay for peace of mind.

Do a search there are a few that post on here, Nixon Williams SJD etc.

newbie q

This value should be on your payslips. I pay the amount on the payslip in a cheque to myself, and dividends as separate cheques. Keeps it clearer on the bank statements. Also, there is usually several k difference between them anyway

Ok..Iam a newbie to contracting and have set up my own LTD.I have some basic questions which might be very helpful if someone explains the below.

For ease of all lets assume the LTD company made 100,000 in a year.

1) How much do i pay myself as a monthly salary in order to avoid tax or pay less tax
2) How much the company has to pay as tax(corp tax? 20%?)
3) What is the amount lost in VAT?
4) Is there an emploer NI that needs to go from the company account(which results in less amount of money left for dividends purpose?)
5) Finally how much tax,NI that the employee(I) need to be paying..
6) what is the amount of allowable expenses that is tax free

Can someone explain neatly with some figures assuming the company made 100K in a year and finally what would be the net profit?

Thanks
AJ

[Ruprect]

This value should be on your payslips. I pay the amount on the payslip in a cheque to myself, and dividends as separate cheques. Keeps it clearer on the bank statements. Also, there is usually several k difference between them anyway

[youngguy]

Apologies for the very basic numptie question:-

In your cash book what to you call your 'salary'?

Ie do I say I have paid myself x amount salary for the month or do I use a different term (such as PAYE)?

[Ruprect]

I don't know whether you HAVE to take separate payments or not, but I always do, as I think that if in 5 years time I have to look at the accounts and figure out whats going on it'll be alot clearer when my expenses amount was X, PAYE was Y, and divi was Z.

HTH

[gingerjedi]

Another dividend question:

Suppose at the end of the month I pay myself salary but I also want to take a dividend should I use 2 different transactions or would 1 be o.k? Should I do them on different dates? I know some people will say you should only pay div's every quarter but my accountant says that there is no need and monthly is fine.

Also any expenses I want to transfer, should that be a separate payment as well?

[PAG]

Say my Ltd has profit of 100K after all expenses

What happens to that money? does the fact that its been declared as a dividend and I am the 100% share holder mean that it counts against my income tax allowance EVEN THOUGH it remains in the company bank account?


I know I can change the amount released as dividends by instructing the accountant but was just curious as to what happened in the above situation..

Yes, because you have declared it as dividen it will count towards your allowance. You should only declare as much as you want and leave the rest in the co. where CT of 20% is applied only once. Then when you don't have a job or in between (rainy days) ... the money left in company a/c can be utilised.

[ookook]

Say my Ltd has profit of 100K after all expenses

I lose 20% for corporation tax leaving 80K for distribution

I want to withdraw just enough in the year to take me up to the higher tax bracket (39,000 or whatever it is)

What happens if i declare dividends but dont withdraw them?

eg: my accountant instructs me that after all taxes i can take 7K per month in dividends and authorises the distribution..

say i only need 3K a month so thats all i use - i leave the other 4k in the company.

What happens to that money? does the fact that its been declared as a dividend and I am the 100% share holder mean that it counts against my income tax allowance EVEN THOUGH it remains in the company bank account?


I know I can change the amount released as dividends by instructing the accountant but was just curious as to what happened in the above situation..