LTD Company Tax Calculator?

TaxQuestions_2

Dazed_and_confused wrote: »

That would presumably be because you previously supplied no useful information about your income.

Why do you now think you won't be entitled to the dividend allowance/nil rate band?

Sorry if I've been confusing!

I probably should've said:
There was £40,000 profit from the LTD company.

That money will be split between the two shareholders 50/50.

That is the shareholders only income for the year.

So does that mean we (the two shareholders) each get £20,000 in dividends?

With a personal allowance of £11,000 each, we are only taxed on the remaining £9,000 each?

Is the tax at the Basic Rate (7.5%)?

Hope this makes sense! Thanks.

TaxQuestions_2

Darksparkle wrote: »

These examples show you still get the personal allowance as well as the dividend allowance -

If I'm reading it right it would mean you wouldn't pay any tax.

Thanks for the link!

I must've provided the wrong information as I'm sure there is tax to be paid somewhere - either by the shareholders or the company?

Thanks.

Darksparkle

TaxQuestions wrote: »

Thanks for the link!

I must've provided the wrong information as I'm sure there is tax to be paid somewhere - either by the shareholders or the company?

Thanks.

The link is referring to tax an individual pays on dividends.

Pennywise

In reality, how was the money paid to the directors/shareholders?

It's only payroll if it was put through a payroll and submitted via RTI to HMRC.

It's only dividend if it was decided and minuted in a meeting and dividend voucher prepared.

If you've just taken bits of money out over the year without it properly being payroll or dividends, then it's a loan and everything re tax is different.

The year end is the wrong time to sort this out. Before you make a payment to yourself, you have to decide "what" it is - if it's payroll, then RTI submission needed to HMRC. If it's a dividend, then a directors meeting minute and dividend voucher. To pay a dividend, it has to be legal which means it must come out of post-tax profits, i.e. leave enough in the company bank for the corporation tax.

No-one can tell you how much tax is paid without sight of the accounting records and without knowing how much has been drawn out, how much payroll properly paid/submitted, how much dividend properly documented.

booksurr

TaxQuestions wrote: »

Thanks for that.

This is the only income of the shareholders.

each would get a dividend of 16,000 and each would then be subject to personal income tax on their respective dividend

So of that 16k, 5k is not taxed leaving tax to be paid on the 11k at what rate?

Thanks!

read #5 agin, leaving out some of the previous details which you should nonetheless not ignore (hence use of "" ):
- company "profit" of 40k "means" corporation tax of 8k is due
- distributable profits thus 32k not 40k
- dividend per person 16k
- each person gets their standard 11k personal allowance and 5k of nil rate dividend band. 11 + 5 = 16k meaning no income tax will be paid at all y the person receivg the dividend. Any dividend in excess of 16k (and with no other income at all for that person) would be taxed at 7.5% up to the ceiling of the basic rate tax bracket ie. £32,000

As neither person has any other form of income at all according to your info, they both need to very seriously consider their national insurance position, since neither is paying any NI, so will not be getting any pension credits or building up any entitlement to contributions based benefits. I am very surprised that your accountant has not told you to take what is colloquially called the "director's minimum salary" to get you your NI credits since you are both trading from within a Ltd Company

booksurr

Pennywise wrote: »

If you've just taken bits of money out over the year without it properly being payroll or dividends, then it's a loan and everything re tax is different.

The year end is the wrong time to sort this out. Before you make a payment to yourself, you have to decide "what" it is - if it's payroll, then RTI submission needed to HMRC. If it's a dividend, then a directors meeting minute and dividend voucher.

You are of course correct, though "in reality" becomes "in practice" as far as one accountant I know is concerned where ad hoc drawings are posted to the DLA and "cleared" by a year end dividend. Thereby creating some very "fanciful" decimal point dividend rates when he tells the client what to put through the records as the dividend declarations (and equally fanciful high jinks in respect of the £10k DLA balance rule and whether there was enough profit available at the time of each interim distribution!)

At least that client has now been educated sufficiently well to no longer put "wages" as the payment reference on each bank drawing, so the bank statement now says "dividend" instead

Dazed_and_confused

booksurr
I wouldnt be at all surprised if op changed their story re director salary/NIC (or maybe they've got a poor accountant or good accountant who they've ignored??)

I understand what you mean about dividend up to 32000 but in this (slightly unlikely ) situation wouldn't 27000 be taxed at 7.5% with 5000 taxed at 32.5%?

booksurr

TaxQuestions wrote: »

I must've provided the wrong information as I'm sure there is tax to be paid somewhere - either by the shareholders or the company?

the company has to pay corproation tax before the dividends can be distributed, so yes, "someone" does pay tax

equally if the dividends are big enough that the individual receipient will pay income tax if they get more than the tax free thresholds

Cook_County

If the accountants are wise, they will charge the company a fee of £40,000 for their work, so that their will be zero profit and zero tax...

polymaff

Dazed_and_confused wrote: »

I understand what you mean about dividend up to 32000 but in this (slightly unlikely ) situation wouldn't 27000 be taxed at 7.5% with 5000 taxed at 32.5%?

No. Are you confusing the company's distributable £32,000 with the individual income tax payer's basic rate band £32,000?