Dividends and milleage

[Koksmanreikals]

Hi,

Lets say I pay myself £12,500 as a salary and £7500 as a dividend from my LTD company.

Which is £20,000 per annum. And I make 20,000 bussiness miles in my personal car.

First 10,000 @ .45 = £4500
Another 10,000 @ .25 = £2500

So I will get tax relief on £7000 dividends which I have paid to myself?

Thank you!

 

[NewKidinTown]

Hi,

Lets say I pay myself £12,500 as a salary and £7500 as a dividend from my LTD company.

Which is £20,000 per annum. And I make 20,000 bussiness miles in my personal car.

First 10,000 @ .45 = £4500
Another 10,000 @ .25 = £2500

So I will get tax relief on £7000 dividends which I have paid to myself?

Thank you!

No - your LTD will get tax relief on the business miles that you have been reimbursed by your company. You will be taxed personally on the salary and dividends received after allowances. You don't get tax relief on dividends

 

[WaveJumper]

Have a read here

Do I pay tax on dividends from my limited company?

If your company has sufficient distributable profits, extracting these by way of dividends may be the most tax-efficient way of taking money from the company.

www.realbusinessrescue.co.uk

 

[Koksmanreikals]

No - your LTD will get tax relief on the business miles that you have been reimbursed by your company. You will be taxed personally on the salary and dividends received after allowances. You don't get tax relief on dividends

Oh okay. So could you please explain how I will get paid for milleage? Just direct payment from LTD? Is it monthly/early? Or once I claim it?

I am one of director (2 total) and I own 50% of shares.

 

[NewKidinTown]

I would expect you to submit a claim to your LTD and have any claim backed up by the appropriate journey logs, mileages etc

 

[NewKidinTown]

Have a read here

useful summary - beware the information refers to the 2022/23 tax year

 

[Koksmanreikals]

I would expect you to submit a claim to your LTD and have any claim backed up by the appropriate journey logs, mileages etc

I do count milleage with Mileiq app.

Right now I am director, but I am not on payroll. I don't pay myself any salary this tax year because I have reached higher tax rate already (was self employed sole trader) before incorporating LTD.

Can I still claim milleage or you must pay yourself salary to be able to claim milleage expenses?

 

[NewKidinTown]

you can still claim mileage, don't need to pay a salary

 

[Koksmanreikals]

you can still claim mileage, don't need to pay a salary

Thank you for reply.

I was counting milleage since November.

In total I have done 13,000 miles already. I will be able to claim it or it has to be on monthly basis?

 

[Newchodge]

Thank you for reply.

I was counting milleage since November.

In total I have done 13,000 miles already. I will be able to claim it or it has to be on monthly basis?

You claim it from your employer. They set the rules. As you run your employer ltd company you set the rules.

 

[Koksmanreikals]

You claim it from your employer. They set the rules. As you run your employer ltd company you set the rules.

Great! I'll ask my accountant to sort it out after bank holiday.

The rates which is .45 for first 10,000 and .25 for the rest is it per tax year or not? I mean does .45 rate reset in new tax year or once you claimed 10,000 all the rest will be at .25 as long as you claim milleage?

Thank you

 

[NewKidinTown]

I hadn't realised you had an appointed accountant - you should probably address any further queries to them

 

[Koksmanreikals]

I hadn't realised you had an appointed accountant - you should probably address any further queries to them

I will but because it's bank holiday I will get reply only on tuesday.

Also I like to check with other sources before I raise queries to accountant.

I would appreciate if you could explain how it works.

 

[WaveJumper]

Its what you pay your accountant for, to give you the best possible tax advice based on all the facts especially since you seem to have several streams of income and all this needs to be taken into account

 

[MyAccountantOnline]

I will but because it's bank holiday I will get reply only on tuesday.

Also I like to check with other sources before I raise queries to accountant.

I would appreciate if you could explain how it works.

When you contact your accountant ask them about recovering VAT on your business mileage (if your company is VAT registered) it's something easily overlooked. You can't claim VAT on the entire allowance but on a part of it - your accountant will be able to explain.

 

[Koksmanreikals]

Do I need to declare payments received from milleage when filing self assesment?

Paid for miles at rates:
0.45 for first 10k
0.25 for the rest

Thank you

 

[Scalloway]

If you are receiving the HMRC approved mileage rate you do not need to put anything on your personal self assessment.

 

[DWS]

I suppose you can’t ask your accountant because it’s a bank holiday?
Again!

 

[Koksmanreikals]

I suppose you can’t ask your accountant because it’s a bank holiday?
Again!

Chill, whats the point of this website then if people can't ask questions? Or you just trying to increase your post count with useless comments?

 

[DWS]

Chill, whats the point of this website then if people can't ask questions? Or you just trying to increase your post count with useless comments?

I’m chilled, and nothing wrong at all with asking questions but why have an accountant like you say you have if you are not going to ask them questions like this, that’s what you pay them for.

 

[Koksmanreikals]

I’m chilled, and nothing wrong at all with asking questions but why have an accountant like you say you have if you are not going to ask them questions like this, that’s what you pay them for.

I do have accountant believe it or not. I always check information with more sources. Are you telling me that I should blindly trust what ever accountant says?

 

[DWS]

I do have accountant believe it or not. I always check information with more sources. Are you telling me that I should blindly trust what ever accountant says?

Yes I am saying that!
Why would you trust people on a forum who you don’t know and not your accountant.

 

[Koksmanreikals]

Yes I am saying that!
Why would you trust people on a forum who you don’t know and not your accountant.

I don't blindly follow advice on here as well. If I have more advice I can check it if its valid and then discuss about it with accountant. If I listen just to what accountant says... Nah not for me. So I'd be gratefull if you can leave usefull advice, if not just ignore my posts.

 

[DWS]

I don't blindly follow advice on here as well. If I have more advice I can check it if its valid and then discuss about it with accountant. If I listen just to what accountant says... Nah not for me. So I'd be gratefull if you can leave usefull advice, if not just ignore my posts.

I’ve given you useful advice in the past if you care to look back at your threads.

 

[Koksmanreikals]

I’ve given you useful advice in the past if you care to look back at your threads.

Thank you for that. I don't get it why this post was exception

 

[matlob]

Great! I'll ask my accountant to sort it out after bank holiday.

The rates which is .45 for first 10,000 and .25 for the rest is it per tax year or not? I mean does .45 rate reset in new tax year or once you claimed 10,000 all the rest will be at .25 as long as you claim milleage?

Thank you

Resets each financial year.

 

[UK Contractor Accountant]

I suppose you need to check with your Accountant that the mileage you are claiming is allowable travel for tax. Travelling to and from a workplace in some cases is not allowable.

 

[Koksmanreikals]

I suppose you need to check with your Accountant that the mileage you are claiming is allowable travel for tax. Travelling to and from a workplace in some cases is not allowable.

It is. I travel to temporary sites and logging miles by tracker fitted to van.

 

[DWS]

Would you not have been better off transferring the van into the Company and claiming actual expenses?
I thought from your OP it was a car, not always the case but but I find generally that claiming actual expenses for a van and claiming mileage for a car works better.

 

[Koksmanreikals]

Would you not have been better off transferring the van into the Company and claiming actual expenses?
I thought from your OP it was a car, not always the case but but I find generally that claiming actual expenses for a van and claiming mileage for a car works better.

My current van is giving its last breath lol. It has no value. So mileage claims works not too bad. Especialy now when I do 200miles a day. (Fuel cost £35 a day)

But I do understand that I will need a new van very soon. Which will be on a company name. But haven't decided how I will fund it. Maybe I'll create another thread to find out what is the most tax efficient way.

 

[DWS]

My current van is giving its last breath lol. It has no value. So mileage claims works not too bad. Especialy now when I do 200miles a day. (Fuel cost £35 a day)

But I do understand that I will need a new van very soon. Which will be on a company name. But haven't decided how I will fund it. Maybe I'll create another thread to find out what is the most tax efficient way.

It must have some value if you are getting 200 miles a day out of it!
You also need to consider that if you claimed the cost of the van when you were self employed then it will count as a disposal of the van at market value when you ceased self employment, and this will need reporting on your self assessment.

 

[Newchodge]

For the dividends you've paid yourself, you'd get relief on the £7000, considering the rates for the mileage.

Please could you explain what you mean here?

 

[TheSkyisGray]

You will need to calculate the mileage, work out the profit, work out the tax, work out the reserves and then pay a dividend out of the reserves.

If you don’t trust your accountant get another one.