Bookmarks

Yahoo Gmail Google Facebook Delicious Twitter Reddit Stumpleupon Myspace Digg

Search queries

wwwchildsexcom, conradelektronik detektiv anwesend?, pro vorsorge plus 4u liberty Europe fonds, einkommensteuervorauszahlung in skr03 buchen, einkommensteuer vorauszahlung buchen skr 04, was bedeutet über eine etwaige verrechnung des restguthabens mit gegenansprüchen erhalten sie eine besondere mitteilung, daumenschiene auto fahren, bverwverfg, steuerbescheid verrechnung des restguthabens mit gegenabsprüchen, verzugszinsen deliktsrecht

Links

XODOX
Impressum

#1: Director's salary

Posted on 2006-07-22 15:57:21 by listerofsmeg01

I currently work full time and earn approx =A331k.

I wish to start a ltd company and trade in my spare time.

Obviously if I pay myself more than =A32k, I will get hit with 40%
income tax.

Therefore, is it possible to pay myself the minimum =A32k, and reap the
company profits via dividend, or is =A32k too much of an "unreasonable"
figure for the IR.

If =A32k is acceptable, do I have to pay myself anything at all? 19%
corporation tax is better than 22% income tax.

Thanks,
Lister

Report this message

#2: Re: Director's salary

Posted on 2006-07-22 16:17:53 by listerofsmeg01

<a href="mailto:listerofsmeg01&#64;hotmail.com" target="_blank">listerofsmeg01&#64;hotmail.com</a> wrote:
&gt; I currently work full time and earn approx =A331k.
&gt;
&gt; I wish to start a ltd company and trade in my spare time.
&gt;
&gt; Obviously if I pay myself more than =A32k, I will get hit with 40%
&gt; income tax.
&gt;
&gt; Therefore, is it possible to pay myself the minimum =A32k, and reap the
&gt; company profits via dividend, or is =A32k too much of an &quot;unreasonable&quot;
&gt; figure for the IR.
&gt;
&gt; If =A32k is acceptable, do I have to pay myself anything at all? 19%
&gt; corporation tax is better than 22% income tax.
&gt;
&gt; Thanks,
&gt; Lister

OK, I've just realised I've boobed, and forgotten my personal tax
allowance, so it's actually around =A37k before I hit the higher tax
bracket, but the question remains, what is the lowest &quot;acceptable&quot;
salary for a director?

Report this message

#3: Re: Director's salary

Posted on 2006-07-22 17:01:09 by Ronald Raygun

<a href="mailto:listerofsmeg01&#64;hotmail.com" target="_blank">listerofsmeg01&#64;hotmail.com</a> wrote:

&gt;
&gt; <a href="mailto:listerofsmeg01&#64;hotmail.com" target="_blank">listerofsmeg01&#64;hotmail.com</a> wrote:
&gt;&gt; I currently work full time and earn approx £31k.
&gt;&gt;
&gt;&gt; I wish to start a ltd company and trade in my spare time.
&gt;&gt;
&gt;&gt; Obviously if I pay myself more than £2k, I will get hit with 40%
&gt;&gt; income tax.
&gt;&gt;
&gt;&gt; Therefore, is it possible to pay myself the minimum £2k, and reap the
&gt;&gt; company profits via dividend, or is £2k too much of an &quot;unreasonable&quot;
&gt;&gt; figure for the IR.
&gt;&gt;
&gt;&gt; If £2k is acceptable, do I have to pay myself anything at all? 19%
&gt;&gt; corporation tax is better than 22% income tax.
&gt;&gt;
&gt;&gt; Thanks,
&gt;&gt; Lister
&gt;
&gt; OK, I've just realised I've boobed, and forgotten my personal tax
&gt; allowance, so it's actually around £7k before I hit the higher tax
&gt; bracket, but the question remains, what is the lowest &quot;acceptable&quot;
&gt; salary for a director?

Zero. You don't *have* to pay yourself any salary at all.

The problem is that usually when this question is asked, it is asked
from the perspective of someone who does not also have a full time job.

For someone whose only source of income is his company, paying himself
a salary equal to the personal allowance has the advantages that:

1) It doesn't get taxed under corporation tax because as far as the
company is concerned it's an allowable expense reducing its taxable
profit.

2) It doesn't get taxed under income tax because its the PA.

3) It gives you credit for NI contributions without either you or
the company having to pay them.

But for someone in your position, whose PA is already used up and
who does already pay NI, it would be more appropriate to take all
your company remuneration as dividends.

You can pay yourself approximately (£38k-£31k)*0.9 = £6300 in dividends
without any tax becoming due. Any amount above that will be taxed
at 25%. Of course the business will pay CT at 19% on all its profit,
so in effect those £6300 will represent £7778 of pre-tax profit.

Every additional pound of pre-tax profit will suffer a 19p CT
deduction, and the 25% Dividend Income Tax will reduce this to 60.75p
in your pocket. That's almost equivalent to a 40% deduction, but if
the company were to pay you salary instead (which would be taxed at
40%), don't forget that it would also have to pay 12.8% employer's
NI on all but the first tranche approximately equal to the PA.

Hence every pound paid as salary would cost the company 1.128, and would
leave you with 59p in your pocket, an effective tax rate of almost 48%.

Report this message

#4: Re: Director's salary

Posted on 2006-07-22 20:24:03 by Stickems.

&quot;19% corporation tax is better than 22% income tax&quot;

Oh no it's not. The choice is 22% if you pay all the profits as salary or
19% if the profits are left in the company plus 22% if and when they are
paid as salary.


&lt;<a href="mailto:listerofsmeg01&#64;hotmail.com" target="_blank">listerofsmeg01&#64;hotmail.com</a>&gt; wrote in message
news:<a href="mailto:1153577873.845435.292990&#64;m79g2000cwm.googlegroups.com..." target="_blank">1153577873.845435.292990&#64;m79g2000cwm.googlegroups.com...</a>

<a href="mailto:listerofsmeg01&#64;hotmail.com" target="_blank">listerofsmeg01&#64;hotmail.com</a> wrote:
&gt; I currently work full time and earn approx £31k.
&gt;
&gt; I wish to start a ltd company and trade in my spare time.
&gt;
&gt; Obviously if I pay myself more than £2k, I will get hit with 40%
&gt; income tax.
&gt;
&gt; Therefore, is it possible to pay myself the minimum £2k, and reap the
&gt; company profits via dividend, or is £2k too much of an &quot;unreasonable&quot;
&gt; figure for the IR.
&gt;
&gt; If £2k is acceptable, do I have to pay myself anything at all? 19%
&gt; corporation tax is better than 22% income tax.
&gt;
&gt; Thanks,
&gt; Lister

OK, I've just realised I've boobed, and forgotten my personal tax
allowance, so it's actually around £7k before I hit the higher tax
bracket, but the question remains, what is the lowest &quot;acceptable&quot;
salary for a director?

Report this message

#5: Re: Director's salary

Posted on 2006-07-23 10:37:31 by Tim

&quot;Stickems.&quot; wrote
&gt; &quot;19% corporation tax is better than 22% income tax&quot;
&gt;
&gt; Oh no it's not. The choice is 22% if you pay all the
&gt; profits as salary or 19% if the profits are left in the
&gt; company plus 22% if and when they are paid as salary.

Hehehe - you've really got no idea, have you!

(1) He's talking about paying it as dividend,
*not* salary (so 22% does not apply);

(2) If the profits had been left in the company
and 19% CT paid, and then *later* paid out
as salary, then the company would receive
19% corporation tax relief at that time (as
salary is a legitimate business expense).

Report this message

#6: Re: Director's salary

Posted on 2006-07-23 14:01:44 by Stickems.

(1) He's talking about paying it as dividend,
*not* salary (so 22% does not apply);

Since when are dividends not taxable?


&quot;Tim&quot; &lt;<a href="mailto:me&#64;home.uk" target="_blank">me&#64;home.uk</a>&gt; wrote in message news:<a href="mailto:G5edndeKu9E7qF7ZRVnygg&#64;bt.com..." target="_blank">G5edndeKu9E7qF7ZRVnygg&#64;bt.com...</a>
| &quot;Stickems.&quot; wrote
| &gt; &quot;19% corporation tax is better than 22% income tax&quot;
| &gt;
| &gt; Oh no it's not. The choice is 22% if you pay all the
| &gt; profits as salary or 19% if the profits are left in the
| &gt; company plus 22% if and when they are paid as salary.
|
| Hehehe - you've really got no idea, have you!
|
| (1) He's talking about paying it as dividend,
| *not* salary (so 22% does not apply);
|
| (2) If the profits had been left in the company
| and 19% CT paid, and then *later* paid out
| as salary, then the company would receive
| 19% corporation tax relief at that time (as
| salary is a legitimate business expense).
|
|
|

Report this message

#7: Re: Director's salary

Posted on 2006-07-23 14:18:53 by Jonathan Bryce

Stickems. wrote:

&gt; (1) He's talking about paying it as dividend,
&gt; *not* salary (so 22% does not apply);
&gt;
&gt; Since when are dividends not taxable?

For quite a long time, if you are a basic rate taxpayer.

Report this message

#8: Re: Director's salary

Posted on 2006-07-23 14:42:02 by Tim

&quot;Tim&quot; wrote
&gt; &gt; (1) He's talking about paying it as dividend,
&gt; &gt; *not* salary (so 22% does not apply);
&gt; &gt;
&quot;Stickems.&quot; wrote
&gt; Since when are dividends not taxable?

They may be taxable, but not at the 22% rate!

Report this message

#9: Re: Director's salary

Posted on 2006-07-23 17:23:09 by Stickems.

I can assure you, and Jonathan, that dividends are most definitely taxable.
The rate is 20%.


&quot;Tim&quot; &lt;<a href="mailto:me&#64;home.uk" target="_blank">me&#64;home.uk</a>&gt; wrote in message
news:<a href="mailto:k96dnRMm0o5o817ZnZ2dnUVZ8tGdnZ2d&#64;bt.com..." target="_blank">k96dnRMm0o5o817ZnZ2dnUVZ8tGdnZ2d&#64;bt.com...</a>
| &quot;Tim&quot; wrote
| &gt; &gt; (1) He's talking about paying it as dividend,
| &gt; &gt; *not* salary (so 22% does not apply);
| &gt; &gt;
| &quot;Stickems.&quot; wrote
| &gt; Since when are dividends not taxable?
|
| They may be taxable, but not at the 22% rate!
|
|
|

Report this message

#10: Re: Director's salary

Posted on 2006-07-23 17:34:18 by Tim

&gt; | &quot;Tim&quot; wrote
&gt; | &gt; &gt; (1) He's talking about paying it as dividend,
&gt; | &gt; &gt; *not* salary (so 22% does not apply);
&gt; | &gt; &gt;
&gt; | &quot;Stickems.&quot; wrote
&gt; | &gt; Since when are dividends not taxable?
&gt; |
&gt; &quot;Tim&quot; wrote
&gt; | They may be taxable, but not at the 22% rate!
&gt;
&quot;Stickems.&quot; wrote
&gt; I can assure you, and Jonathan, that
&gt; dividends are most definitely taxable.

Correct. I've never said that they're not.

&quot;Stickems.&quot; wrote
&gt; The rate is 20%.

Wrong again!
Care to try any other rates? ;-)

Report this message