Reply to: Ltd Company - (Money)

[tino]

What do you mean by that?

my accountant says iam allowed to take £500* 12 = 6000 and £2000 * 12 = 24,000 thats it..

how do i take more dividents? iam assuming the bottom line is £24,000 + £6000 = £30,000/year...

anyway guys, thanks very much for all the comments...

Change accountants and do a bit of reading up. If your accountant told you to take £5000* 12 = 60000 and £20000 * 12 = £240,000 would you do it? That's maybe an extreme analogy but YOU are responsible for knowing the rules because mark my words, HMRC won't hammer your accountant for getting it wrong - they'll hammer YOU

[MPwannadecentincome]

Not quite, if a big co has a gym in their building, there is no benefit-in-kind charge on the employee. The cost of setting up the gym is a real cost to the company (including flooor space) and yes they do get a corporation tax deduction for it.

If then big co pays for employees gym membership (at a local club or otherwise - the club might be near to where the employee lives), then the cost of the gym membership is also deductible for corporation tax purposes, but in this case, the cost is a benefit-in-kind for the employee (and as you say the employee will pay tax on the value of that membership). But the company also has to pay 12.8% (currently) NIC on the cost of that benefit to HMRC.

With regard to little contractor providing their services through their own Ltd co - the exact same rules apply.

Interesting, when I get my new office I must remember to kit it out with a gym at the same time!

[NickNick]

What do you mean by that?

my accountant says iam allowed to take £500* 12 = 6000 and £2000 * 12 = 24,000 thats it..

how do i take more dividents? iam assuming the bottom line is £24,000 + £6000 = £30,000/year...

anyway guys, thanks very much for all the comments...

Ok, so I really think that you shoudl read the first timers section as there seem to be some fundamentals that you lack here.

One thing to remember is that it's your company and not your accountants and so you shoudl be telling him what you want to do and he shoud be advising you on teh most tax efficient way to do it.

[Bengal]

Interesting and highlights the variation between big co and little contractor...

big co - may have a gym in the office or pays for gym membership at a local club - employee may have to pay tax on the benefit, but this would in effect be 40% of the cost (maybe higher when the new tax bands come in!). The big co will I bet be claiming all the memberships or cost of running the in-house gym as an expense (am I wrong?)

little contractor - can't claim the gym costs - full stop.

Not quite, if a big co has a gym in their building, there is no benefit-in-kind charge on the employee. The cost of setting up the gym is a real cost to the company (including flooor space) and yes they do get a corporation tax deduction for it.

If then big co pays for employees gym membership (at a local club or otherwise - the club might be near to where the employee lives), then the cost of the gym membership is also deductible for corporation tax purposes, but in this case, the cost is a benefit-in-kind for the employee (and as you say the employee will pay tax on the value of that membership). But the company also has to pay 12.8% (currently) NIC on the cost of that benefit to HMRC.

With regard to little contractor providing their services through their own Ltd co - the exact same rules apply.

[Jaws]

What do you mean by that?

my accountant says iam allowed to take £500* 12 = 6000 and £2000 * 12 = 24,000 thats it..

how do i take more dividents? iam assuming the bottom line is £24,000 + £6000 = £30,000/year...

anyway guys, thanks very much for all the comments...

It all depends on how much your company brings in. If there is extra money past your current income (via the salary + dividends) after corporation tax/VAT you are free to take it (although you may need to pay additional taxes if you go over higher rate income tax level). My accountant makes me aware of my profits so it's quite easy to select the amount I want in dividend.

[wasiter]

If you need more money and the co. has it then either pay more dividends less the corp tax or take as PAYE with normal tax and NI deducted. What is the problem?

What do you mean by that?

my accountant says iam allowed to take £500* 12 = 6000 and £2000 * 12 = 24,000 thats it..

how do i take more dividents? iam assuming the bottom line is £24,000 + £6000 = £30,000/year...

anyway guys, thanks very much for all the comments...

[MPwannadecentincome]

Hi all,

I run a LTD company and i have an accountant and he allows me to take £500 (PAYE) and £2000 (divident) and iam claiming expenses for petrol, car insurance, mobilephone, GYM and ofcourse FOOD.

Now, very basic question IS THERE ANY OTHER WAY (MORE MONEY) I CAN TAKE MONEY FROM MY COMPANY ACCOUNT?

My accountant is telling me that i should pay 40% TAX for that... he is asking me to do OFFSET MORTGAGES if i have to take money out...

I still have some credit card debts to pay now the £2500 (PAYE + Divident) is not enough to pay off my bills... i found very annoying where i can see my money but, i can't touch it...

Iam not trying to cheat the HMRC to take more money iam just looking @ the options available to take the money OUT...

Any suggestions plz?

Thanks

If you need more money and the co. has it then either pay more dividends less the corp tax or take as PAYE with normal tax and NI deducted. What is the problem?

[gingerjedi]

I'm a bit confused, still can't see a reference to this £5k limit. All the HMRC site seems to suggest is that the money has to be stated on the return as a director's loan if not in the account at year end, and if not paid back by nine months one day after year end, 25% interest is charged? I don't see any reference to limits, or a stipulation as to when a loan may be considered a BIK rather than simply a director's loan??

Here you go: Link 3rd one down.

[MPwannadecentincome]

How can Gym membership be considered a business expense? Are you a fitness instructor?

Interesting and highlights the variation between big co and little contractor...

big co - may have a gym in the office or pays for gym membership at a local club - employee may have to pay tax on the benefit, but this would in effect be 40% of the cost (maybe higher when the new tax bands come in!). The big co will I bet be claiming all the memberships or cost of running the in-house gym as an expense (am I wrong?)

little contractor - can't claim the gym costs - full stop.

[Dandyman]

Mate you are confusing what is considered to be a directors loan for corporate tax purposes (£15k limit) and what a beneficial loan is for benefit-in-kind purposes (£5k limit).

I'm a bit confused, still can't see a reference to this £5k limit. All the HMRC site seems to suggest is that the money has to be stated on the return as a director's loan if not in the account at year end, and if not paid back by nine months one day after year end, 25% interest is charged? I don't see any reference to limits, or a stipulation as to when a loan may be considered a BIK rather than simply a director's loan, or what the difference is in the first place??

[Bengal]

It is your money...you have worked hard for it. Don't listen to the others on here.

Just go into the bank and withdraw the money anytime you like. The bank statements come to you so of course it is your money.

Pay off your credit card bills as soon as you can and then you can start enjoying all that lovely money that is yours to do with what you want.



IANAL, IANAA etc.

Er, OK????!!!!????

[Bengal]

Where are you getting £5k from?

I can only see reference to £15k in the attached link

http://www.hmrc.gov.uk/ct/returns/director-loan.htm

Mate you are confusing what is considered to be a directors loan for corporate tax purposes (£15k limit) and what a beneficial loan is for benefit-in-kind purposes (£5k limit).

[techno]

... i found very annoying where i can see my money but, i can't touch it...

It is your money...you have worked hard for it. Don't listen to the others on here.

Just go into the bank and withdraw the money anytime you like. The bank statements come to you so of course it is your money.

Pay off your credit card bills as soon as you can and then you can start enjoying all that lovely money that is yours to do with what you want.



IANAL, IANAA etc.

[Dandyman]

Where are you getting £5k from?

I can only see reference to £15k in the attached link

http://www.hmrc.gov.uk/ct/returns/director-loan.htm

[Bengal]

Thats what accountants say, if it's over 5k then its BIK therefore taxable.

Your accountant is correct.

People, you need to remember that even though you are a director of the company you are still subject to the same (if not worse) tax rules as any employee.