Ltd company expenses

[singhr]

Try www.hmrc.gov.uk

[TheFaQQer]

Is there a general document anywhere that shows what you can claim as an employee compared to a company?

Try www.hmrc.gov.uk

[chrisl]

Oh dear.

If you don't put your expenses through your company books then your company's profits are higher so you pay 40% tax on a larger amount, that is assuming you take the money out of the company though.

The more I think of it though, the more I think that you are on a hiding to nothing because the expenses that you can offset against tax as an employee are very different to what you can do as a company.

Is there a general document anywhere that shows what you can claim as an employee compared to a company?

[ASB]

Ok, so you are a 40% tax payer, Co income is 100k Co expenses 10k. [Assume the income comes from elsewhere for this]

1) Profit = 90k, CT = 18.9k net = 71.1, all paid as dividend. Extra tax = 25% of 71.1 = 17.775. Total = 36.675

2) Profit = 100k, CT = 21k net = 79k. All paid as divi. Extra tax = 19.75. Total = 40.75. But - assuming you have relevant income then you will reduce your higher rate bill by 4k ('cos 10k is out of the net if you claim the expenses on your tax return). So tax paid = 36.75k.

I have posted on this before, but didn't get an answer from one of the accountants, though I think there may be circumstances in which it is worthwhile - e.g. where amount taken in dividends in < total profit.

[sweetandsour]

Am i missing something obvious here lol

Oh dear.

If you don't put your expenses through your company books then your company's profits are higher so you pay 40% tax on a larger amount, that is assuming you take the money out of the company though.

The more I think of it though, the more I think that you are on a hiding to nothing because the expenses that you can offset against tax as an employee are very different to what you can do as a company.

[chrisl]

I sincerely hope that you are not a coder with that grasp of maths you have.

That said, there are plenty of items, accountancy fees for example, that are perfectly legitimate expenses for your company but would not be appropriate for you to expense as an individual.

Am i missing something obvious here lol

[sweetandsour]

I sincerely hope that you are not a coder with that grasp of maths you have.

That said, there are plenty of items, accountancy fees for example, that are perfectly legitimate expenses for your company but would not be appropriate for you to expense as an individual.

[chrisl]

Just out of interest, if you are a 40% taxpayer, rather than setting off expenses against corporation tax saving 21%, why would you not just put them in the expenses section when you complete your Personal Tax Return at the end of the year and get a 40% saving rather than the 21%?

Or is this just not allowed?