Legal/Illegal? Wise/Foolish? Company Tax

silvercar

Drip feed the money out. personal allowance of £4,850 each year. Then another £30,000 odd dividend to bring you up to the higher rate level. You can repeat this each year without having to pay higher rate tax. Note that the dividend payment has an assumed 10% of tax already paid so £30k is written as £33k with tax paid of £3k in your personal tax return. You will be stung for corporation tax on the company.

The problem with your house buying idea is that now you have a problem getting £200k out, buy a house that increases in value to £250k and you have more money to get out = more tax to pay.

Remember to do everything for sound business reasons rather than only looking at your tax position. Don't take on debts and pay high interest just to avoid the tax bill from getting at your money. Don't form a limited company and then leave so much money in it that the value of being limited is diminished.

Aark

The way I understood the OP, he was looking for a way to reduce:-

a) The Corporation Tax on trading profits of £200,000 (computer software);
b) The Income Tax on extracting the profits from the Company.

The house sale/purchase/development idea does not affect either of these.

As I said, unless you want your Company to hold a house, there doesn't seem to be a point to it.