Toggle sidebar

LTD Question

  • Thread starter Thread starter David Rod
  • Start date Start date
Sort by date Sort by votes
D

David Rod

Hi,

I am about to start my LTD this month, I would like to know is it possible and appropriate to as director of the company pay myself for example 100% of company's profits and this way avoid Corporate Tax? I have figured that for example, if a company makes £30k in a fiscal year from which £28k is payed as salary I will have to pay income tax of 20% after allowance. and corporate tax rate of 19% (if didn't change since I've checked) deducted from £2000 net profit.

Please correct me if I am wrong. Is it the good way to stay almost the same with taxes after changing from Self-Employment to Limited?
 
Last edited by a moderator:
I would get yourself an accountant as they can sort out the cheapest and most cost effective way of doing it for you.

I am sure someone will advise an answer to your question here though.

Good Luck!:)
 
Upvote 0
David Rod said:
Hi,

I am about to start my LTD this month, I would like to know is it possible and appropriate to as director of the company pay myself for example 100% of company's profits and this way avoid Corporate Tax? I have figured that for example, if a company makes £30k in a fiscal year from which £28k is payed as salary I will have to pay income tax of 20% after allowance. and corporate tax rate of 19% (if didn't change since I've checked) deducted from £2000 net profit.

Please correct me if I am wrong. Is it the good way to stay almost the same with taxes after changing from Self-Employment to Limited?
Click to expand...

If you pay yourself a salary of £28k, you will be paying income tax of 20%, NI of 11% plus employers NI of 12.8%. This is a great deal more than corporation tax at 21%.

You need an accountant, to explain the most tax efficient method of extracting money from your business.
 
Upvote 0
Thank you for answers.
After all is it possible with LTD to stay on close-to-similar tax level as when self-employed under £30k a year?
 
Upvote 0
On £30k a year you should be considerably better of as a limited company than a sole trader, provided you have no other income to report.
 
Upvote 0
Thank you, and what way to take money from the £30k company would you suggest as an accountant?
 
Upvote 0
David Rod said:
Thank you, and what way to take money from the £30k company would you suggest as an accountant?
Click to expand...

I think first and foremost you need to understand the difference between being a sole trader and a limited company.

Can I ask you why you chose to be a limited company over a sole trader? Did you seek professional advice?

Kind Regards

Neil
 
Upvote 0
David Rod said:
Thank you, and what way to take money from the £30k company would you suggest as an accountant?
Click to expand...

Depending on a clients specific circumstances generally a salary of £475 per month with the balance as dividends.
 
Upvote 0
You must log in or register to reply here.

Similar threads

N
Loss Unaffected by Deferred Tax Asset in Xero Accounts
Replies
11
Views
5K
Accounts & Finance
numbersrule
N
U
  • Ask a Question Ask a Question
1 man band Ltd director - I was not trading in 2025/26 and want to make the company dormant - how to approach the final steps?
Replies
5
Views
4K
Accounts & Finance
User_Name_2
U
ChrisGoodfellow
Self employed vs. LTD
Replies
7
Views
3K
Accounts & Finance
NortonBishop
N
D
How is Employee's NIC recorded in PnL?
Replies
10
Views
5K
Accounts & Finance
numbersrule
N
M
NI contributions
Replies
15
Views
5K
Accounts & Finance
Maxdude6
M

Latest Articles

Top Bottom
Back