Director of more than one company?

redwhiteblack

Guys,

Dilemma. I operate a business with my business partner which is going ok. However, I have ambitions with my own business which I would like to establish. I know this sounds strange, but am I only restricted to only one company? I don't want to mix accounts up as the businesses are quite different from each other and would make things more complex in every perspective.

Cheers!

ukbill69

You can register any amount of compaines you like. Dont need to mix accounts up. You can only really get a wage from 1 company as otherwise you pay a higher tax rate, but as a share holder you will be able to claim a dividend and pay 19% tax and no NI.

WHA

You can have as many companies as you want.

redwhiteblack

thanks guys, particularly over the dividend payments... completely forgot about that aspect.

WHA

Nothing to stop you getting a smaller wage from every company - there is no NIC on wages under ~£5,000 p.a. so it makes sense for each company to pay you at least that amount in wages as the company gets its corporation tax deduction on the wages expense. Higher rate tax won't come into it until your total personal income reaches around £38k from all your wages, gross dividends and any other income such as interest or other dividends.

sertav

WHA wrote:

there is no NIC on wages under ~£5,000 p.a. so it makes sense for each company to pay you at least that amount in wages as the company gets its corporation tax deduction on the wages expense.

each company? so, assuming 2 companies, a £10k/y wage?

I always assumed a £5k/y, in total, to avoid nic's.Please clarify.

Thanks

WHA

sertav wrote:

each company? so, assuming 2 companies, a £10k/y wage?

I always assumed a £5k/y, in total, to avoid nic's.Please clarify.

Thanks

No, NIC works on earnings from each separate employment or self employment - they are not added together. If you have 4 jobs earning £5k each, you pay no NIC whereas 1 job earning £20k creates a sizeable NIC bill.

As long as the different employments aren't artificial, then HMRC have to accept that situation as that is how the law was written. They do, however, have the right to direct otherwise if it is clear that a single employment or self employment has been artificially separated for tax avoidance purposes.

So as long as each employment or self employment "stands alone" in its own right, i.e. different employers, different customers or products (for self employment), then separation and multiple NIC's lower rates are there for the taking.

pootle666

Don't forget for corporation tax purposes those two businesses will be associated (there's a box on the corporation tax return to put this in) this will halve the 19% corporation tax band for each of the two companies. Given that the upper rate for 19% is £350K profit, this is unlikely to affect you, unless you get really successful, but worth bearing in mind. The band will be shared between all companies you are associated with.

richt71

redwhiteblack wrote:

Guys,

Dilemma. I operate a business with my business partner which is going ok. However, I have ambitions with my own business which I would like to establish. I know this sounds strange, but am I only restricted to only one company? I don't want to mix accounts up as the businesses are quite different from each other and would make things more complex in every perspective.

Cheers!

No restrictions on how many - I'm a director of 3 uk companies. Remember to declare all your directorships on forming another company.

ukbill69

richt71 wrote:

No restrictions on how many - I'm a director of 3 uk companies. Remember to declare all your directorships on forming another company.

Yes always wise to declare about other companines owned.