Ltd Company Director and full time job

sdyson31

I am a one man Ltd company director and i also have a full time job. I do have an accountant but i am here to take second opinion.

I pay 40% tax on my full time job.

I have been running a ltd company sice last year Sept. I use my company for a consultancy work and i have not taken any salary out from my company.

I have the following tax related questions;

1) If i do take any salary from my company then would i be paying 40% tax?

2) If i take 2k dividend then how much tax i need to pay? is it 40%

Thanks

Jeremy535897

1) Yes
2) Assuming no other dividends in the same tax year, there would be no income tax on a £2,000 dividend.

Edi81

If more than £2k dividends (in total) the tax is paid at 32.5% as you are a higher rate tax payer. 

billy2shots

If a partner happened to also be a director, they could access up to £2k of Dividends at 0% tax. 

Jeremy535897

billy2shots said:

If a partner happened to also be a director, they could access up to £2k of Dividends at 0% tax. 

You mean shareholder.

Dazed_and_C0nfused

sdyson31 said:

I am a one man Ltd company director and i also have a full time job. I do have an accountant but i am here to take second opinion.

I pay 40% tax on my full time job.

I have been running a ltd company sice last year Sept. I use my company for a consultancy work and i have not taken any salary out from my company.

I have the following tax related questions;

1) If i do take any salary from my company then would i be paying 40% tax?

2) If i take 2k dividend then how much tax i need to pay? is it 40%

Thanks

1.  Yes

2.  You would pay 0% tax (the dividend nil rate) on the actual dividend however this is taxable income and could mean your overall tax/HICBC bill increases.  For example the £2k income could mean you lose £1,000 of your Personal Allowance meaning you would pay an extra £400 in tax.  So although the dividend income itself is taxed at 0% it can have an effective rate of 20%.

Similar scenario occurs with the High Income Child Benefit Charge and Married Couple's Allowance.

sdyson31

Dazed_and_C0nfused said:

sdyson31 said:

I am a one man Ltd company director and i also have a full time job. I do have an accountant but i am here to take second opinion.

I pay 40% tax on my full time job.

I have been running a ltd company sice last year Sept. I use my company for a consultancy work and i have not taken any salary out from my company.

I have the following tax related questions;

1) If i do take any salary from my company then would i be paying 40% tax?

2) If i take 2k dividend then how much tax i need to pay? is it 40%

Thanks

1.  Yes

2.  You would pay 0% tax (the dividend nil rate) on the actual dividend however this is taxable income and could mean your overall tax/HICBC bill increases.  For example the £2k income could mean you lose £1,000 of your Personal Allowance meaning you would pay an extra £400 in tax.  So although the dividend income itself is taxed at 0% it can have an effective rate of 20%.

Similar scenario occurs with the High Income Child Benefit Charge and Married Couple's Allowance.

I don't have any personal allowance because of the higher income in full time role. Also, don't claim any child benefits, they were stopped long time ago.

I have been trying to find out if there is any tax efficient way to earn something from the company.

I think i have the following options;

1) Pay in pension (don't know if i will have to pay any tax on it)
2) Invest the money some where
3) Leave the money in the company

Jeremy535897

Pension contributions are likely to be your best bet, depending on what pension pot you already have. 

sdyson31

Is there any cooperate tax on profit? Lets say there is £100 profit after 19% cooperate tax and i leave the money in the company. Do i need to pay the cooperate tax on that £100 next year again ? 

Jeremy535897

Companies pay no corporation tax on retained profits, so no.

sdyson31

With regards to paying tax on dividend, let’s say I earn 90k from full time job and claim 10k in dividend then would my earning be 100k? And don’t I need to pay 40% tax? Or its 40% on 90k and 32.5% on 10K ?

Also, does it matter when I claim the dividend? Is company year end different to financial year which starts on 5th April?