tax questions

louisewh123

when it comes to tax, i am really thick. I dont understand what my accountant tells me, and i scared to move to another lol

i was self employed from april 08 to October 08 then set up a ltd company.

earningings as self employed was 7500 ( april 08 to oct 08 ) and as ltd 16000 ( oct 08 to april 09 )

I have just taken money straight out of the business account as and when i have needed, no set wage.

So, on my tax return would i have to put the 16000 as wages, not dividends, as i cant prove i knew this was profit and wasnt a consistant amount? and which is better, as wages or dividends on this amount?

confused

also i havnt been paying national insurance ( accountant said he would look at it at the end of the year ) so if am having the 16k as wages will i have to pay NI on that? ( i paid national insurance monthly when i was self employed)

and last but not least i rent a car privatly and use it for work, how to do i run the car and petrol through my books as a ltd company? I had a expenses form thing earlier in the year and my accountant said to leave it blank, and claim milage later? I sooooooo dont understand!!

any help would be great . .

fengirl_2

Oh dear, why are you payng a dog and barking yourself?
You seem to be in a bit of a pickle.
You are liable to income tax on the profit you made from your self employment, whether you actually drew that money or not. However, the company is liable to Corporation Tax on the profits it made, but you should have been operating PAYE (ie deducting tax and NIC) from the salary you withdrew from the company. Its too late to decide its a dividend.
Your accountant is being a bit casual in saying that he will sort out your NI at the end of the year - it, along with the income tax has to be sorted out on a monthly basis.
With regards to the car, yes, you have to claim a mileage allowance frm the company, but I would say that you are better off claiming from the company every month so that you dont lose track and you are not out of pocket too muh.
I think you need a new accountant with a less casual approach and who can help you understand these things.

MrCarrot

fengirl wrote: »

Oh dear, why are you payng a dog and barking yourself?
You seem to be in a bit of a pickle.
You are liable to income tax on the profit you made from your self employment, whether you actually drew that money or not. However, the company is liable to Corporation Tax on the profits it made, but you should have been operating PAYE (ie deducting tax and NIC) from the salary you withdrew from the company. Its too late to decide its a dividend.
Your accountant is being a bit casual in saying that he will sort out your NI at the end of the year - it, along with the income tax has to be sorted out on a monthly basis.
With regards to the car, yes, you have to claim a mileage allowance frm the company, but I would say that you are better off claiming from the company every month so that you dont lose track and you are not out of pocket too muh.
I think you need a new accountant with a less casual approach and who can help you understand these things.

I agree with an accountant that is going to explain things better. I have to admit though, I pay myself willy-nilly throughout the year (within reason) and my accountant sorts out what is dividends, what is wages and then the associated tax and NI at the end of the year.

I realise that conventionally wages are normally paid monthly, but I have never been in a position to pay myself a set, regular amount. And to go back to my accountant's every month to sort things out would be too long winded.