Tax Computation

[stimac1]

I have drawn all funds (£120,000) from my company during the course of the last 12 months. £20k of this as travel expenses .

What is the best way to account for this to reduce tax. Should all of the drawing be as dividend?

[CassioAcc]

Are you a Sole Trader or Ltd Company?

If you are a LTD Company then dividends can only be paid out of available profits (after tax) and the paper work should be completed prior to payment or this could be seen by the revenue as a salary payment.

If this is taken as a Directors Loan then there may be a Benefit in Kind as the payment is over £5K and there will be may a charge to the Company.

You should get your accounts checked over by your accountant as this could lead to an expensive tax bill.

If you are sole trader then the profits are yours to do with as you wish.

In both cases the travel expenses may or may not be allowable when calculating your tax bill (depending on the exact details)

[stimac1]

It' set up as a LTD Company, the expenses areB/band £25 x 12/52Mobile £30 x 12/52Mileage 100/day Subsist Use of home ComputerAccountancy

How much do you think the tax bill could be?

[stimac1]

PS There was no completed paperwork prior to payment.

[CassioAcc]

It' set up as a LTD Company, the expenses areB/band £25 x 12/52Mobile £30 x 12/52Mileage 100/day Subsist Use of home ComputerAccountancy

How much do you think the tax bill could be?

You can't really tell from this.
You need accounts prepared and then the taxable profits can be arrived at.
There are many things that need to be looked at (such as the drawings mentioned above and the Use of Home arrangments)

As a high level calc you will pay 21% Corp Tax on your profits.

[stimac1]

Based on the following figures :

Turnover 108,627.31

Expenses
-5900Travel-600mobile-900pc-300bband-2160Subsist -120Use of home

Does that mean that my dividends tax will be £14k - is there a way that this can be reduced?

[accountancyextra]

Based on the following figures :

Turnover 108,627.31

Expenses
-5900Travel-600mobile-900pc-300bband-2160Subsist -120Use of home

Does that mean that my dividends tax will be £14k - is there a way that this can be reduced?


Of course we don't have the full picture, but on the numbers supplied the bill will be nearer £21k. In the OP you said £20k for travel, now you've put £5,900.

Did you know that you can only pay didvidends out of profits after tax has been deducted. Looks like you could have been paying an illegal dividend, which will give rise to other tax issues:eek:. Have you completed the neccessary dividend paperwork?

Get an accountant as soon as possible!!

[CassioAcc]

With very few expenses are you a contractor? If so, do you comply with IR35?
It is not dividend tax, but Corp Tax. Also there will be personal tax implications.

[Tom McClelland]

Arranging your affairs so as to (legally) minimise your overall tax bill is not a job for an amateur. Engage an accountant.

You'll have the comfort of knowing that your submissions are compliant *and* the tax saving will extremely likely exceed the accountant's fee by a considerable margin, as long as you can supply the accountant with neat, complete information.

[accountancyextra]

With very few expenses are you a contractor? If so, do you comply with IR35?
.

Good point Aaron