Putting money aside

[cojak]

Oh Dear.

Milan

[BlasterBates]

This sounds like a very clever scheme for maximising your taxation and ensuring you pay practically your entire income in tax, ingenious if I may so, i.e. put money aside to pay tax thus increasing your tax bill etc.

I would advise you to put this ingenious scheme on paper then show it in mirror and photograph the image. If my supposition is correct the resulting image will then represent an ingenuious scheme for avoiding taxation.

[malvolio]

Original Poster....

Abbreviation used by people too lazy to run back up the thread and find his/her forum id...

[boredsenseless]

True, except (a) there's no point in doing so and (b) ISTR companies have to pay out salary before issuing the payslip.

Plus, I suspect this is all news to the OP anyway

Go on then whats an OP ????

[boredsenseless]

Unless it falls under PAYE and NI, which employers deduct at source and pay to the IR. If it's PAYE / NI payments then then I think you can hold the cash in a co. account untill it's due. IANAA, talk to yours.

Not really any point in holding the PAYE in an account seperate to the normal trading account as it has to be paid to gordon once a month anyway.

[malvolio]

True, except (a) there's no point in doing so and (b) ISTR companies have to pay out salary before issuing the payslip.

Plus, I suspect this is all news to the OP anyway

[DaveB]

Unless it falls under PAYE and NI, which employers deduct at source and pay to the IR. If it's PAYE / NI payments then then I think you can hold the cash in a co. account untill it's due. IANAA, talk to yours.

[expat]

Every month I try to put enough money aside in another business account to take into consideration my personal and corporation tax + VAT (that way I don't spend it).

If I take out money from my business account to pay off my personal tax, am I not getting into a viscious circle:

Step 1: Business account 1 -> Business Acount 2 = 35% of dividend for Corp and Personal tax

Step 2: Business Account 2: Cheque from account to pay personal tax

My issue is taking savings out of account 2 to pay personal tax might in itself attract tax (almost like taking out a dividend to pay for personal tax)

And so the viscious circle goes around.

Any thoughts?

Mike

Others will explain it better, but in short:
Corporation tax is paid by a company.
Income tax is paid by a person.


So you can't pay your income tax from the same account as the corporation tax. Whose account is it, yours or the company's? Not the same thing.

Or, to put it another way, your company may not pay your tax for you. Only you can do that: the nearest that your company can do is give you the money that you will need to pay tax. That money then becomes income, naturally.

[malvolio]

Using business money to pay personal liabilities is at best an extended directors loan and you now owe interest and/or BIK on it, and at worst blatant Tax evasion. Which is illegal.

I suggest you take some professional advice, sharpish.

[Mikeeelawson]

Every month I try to put enough money aside in another business account to take into consideration my personal and corporation tax + VAT (that way I don't spend it).

If I take out money from my business account to pay off my personal tax, am I not getting into a viscious circle:

Step 1: Business account 1 -> Business Acount 2 = 35% of dividend for Corp and Personal tax

Step 2: Business Account 2: Cheque from account to pay personal tax

My issue is taking savings out of account 2 to pay personal tax might in itself attract tax (almost like taking out a dividend to pay for personal tax)

And so the viscious circle goes around.

Any thoughts?

Mike