A simple question - Company Tax

Poshsalt

Lets say you bring in £50k profit in your company and wether you take out your tax free directors salary £12.5k or not do you still have to pay 19% tax on that.

Example

Profit                      £50k

Directors Salary -£12.5k

Company £37.5k which is tax 19%

But is that £12.5k taxed 19%?

I.e. is all profit taxed 19% before salary is consided?

Sandtree

Directors salary is a company expense and so is taken off the revenue when calculating the profit and then the  corporate tax 

Pennywise

The director's salary is an expense, so you pay corporation tax on £37.5k in your illustration.

Grumpy_chap

NO, the salary is a business expense deducted before the calculation of profit / corporation tax.

The salary is subject to NI (employers plus employees) and income tax at the appropriate rates.

You would be strongly advised to get an Accountant.  Also a separate business bank account.

I assume you are set up as Ltd Co.  If you are sole trader none of the above, nor your OP, applies.

Poshsalt

Pennywise said:

The director's salary is an expense, so you pay corporation tax on £37.5k in your illustration.

Oh thanks, so then would £12,5k, then taking out upto £35k @ 7.5% dividend would also count as a expense.

Thanks

Sandtree

Dividends isn't an expense... Dividends is the distribution of profits to the shareholders so is post corporation tax

Caz3121

Poshsalt said:

Oh thanks, so then would £12,5k, then taking out up to £35k @ 7.5% dividend would also count as a expense.

once you account for your corporation tax on the profit there would not be £35k available to take as dividend

bris

The dividend would have to be accountable on a self assessment though, it's not tax free.