Tax on dividends

[Jack]

Hi,
I've started a limited company. Contracting for same client getting say £2000 every month. Every 4 months I pay myself a dividend (say £6000). That's it.
a) Am I doing this right?
b) How much should I be looking to set aside for tax? (ie. I need to leave enough money in company acct to pay its tax, and enough in my personal acct to pay mine)
c) Will I have to pay tax on the dividend I get every quarter as well as tax my company will pay on income received?

It's all too confusing/.
Thanks!
J

[planetit]

You sound like you need some help. Download a beginers guide

and get an accountant (at least for the first year).

[4Contractors]

Jack

I have been contracting for over eight years now and like to think I have a reasonable grasp of Limited Company accountancy issues.

I would definitely not attempt to look after my limited company without the assistance of an accountant. There are people on this forum that do do this but I would not recommend this DIY approach when just starting out - employ a specialist IT accountant - believe me it will be money well spent.

[Jack]

Hi,

I have employed an accountant - going to see him in two weeks time. I was just trying to get a feel for how much money I can actually consume, and how much will be going to corporate/personal tax.

Thanks for input though -that guide was useful.

J

[4Contractors]

Without giving actual figures that is not possible to guess - your new accountant should be able to quickly work this out for you based on knowledge of your income, salary, expenses claimed, etc.

[iakobski]

Divis come out of post-tax profits.

As a rule of thumb, you can take out up to four-fifths of whatever you have left after running costs and exies, you will then have enough left to pay the corp tax.

This is not the "best" thing to do though.

1. make sure you don't go into the higher rate tax band, unless you REALLY need the dosh - you wil pay a good chunk of it to the tax man when you come to do your personal tax return.

2. Leave some in the co for the time when you can't get a contract, or fancy a few months off.