Company taxed on year-end balance?

[Cheshire Cat]

If anyone can link to existing thread that would be good as I'm sure this has been discussed ad nauseum, but I couldn't find one searching...

If I were to pay myself just under the higher-level tax threshold in 08-09, and there was still, say, £50k profit in my LtdCo, are there any tax disadvantages to leaving it in the company across the year-end so I can draw salary/divs in 09-10 on that amount? Is there some CGT or other on the "balance" of the business account at year end, or the amont of funds carried over to the next tax year?

[malvolio]

You pay CT on net profits, regardless of whether or not you pay it out as a dividend. That's why your accounts will contain a line for "Retained profits", which you can draw as divis when you want, since divis can only be paid out of profits. So if you have £50k left over one year and earn nothing the next, you can still take up to £50k in divis or salary (or both) - only caveat is to leave enough in the company to pay routine bills or you would effectively be trading while insolvent, which is a major no-no.

However, that is nothing to do with your annual personal taxation. Don't confuse Your money and YourCo's money and liabilities...

[Cheshire Cat]

You pay CT on net profits, regardless of whether or not you pay it out as a dividend. That's why your accounts will contain a line for "Retained profits", which you can draw as divis when you want, since divis can only be paid out of profits. So if you have £50k left over one year and earn nothing the next, you can still take up to £50k in divis or salary (or both) - only caveat is to leave enough in the company to pay routine bills or you would effectively be trading while insolvent, which is a major no-no.

However, that is nothing to do with your annual personal taxation. Don't confuse Your money and YourCo's money and liabilities...

Ok, cheers, so the answer is no then, there is no extra tax (assuming CT has already been paid) that the company must pay just because there is money carried over from one year to the next.

[ASB]

Ok, cheers, so the answer is no then, there is no extra tax (assuming CT has already been paid) that the company must pay just because there is money carried over from one year to the next.

The company will of course be taxed on any profit it makes as a result of the retained profit since that is just current year income.

[Cheshire Cat]

The company will of course be taxed on any profit it makes as a result of the retained profit since that is just current year income.

Yes, so if LtdCo retains £50k from earnings in 08-09, carries that over into year 09-10, and doesn't invoice but earns interest on the £50k, it will pay CT on the interest, but the initial £50k will be deemed as net of all company taxes. Correct?

Obviously, if divs are paid in 09-10, personal tax would be due, at the appropriate rates.

[ratewhore]

Yes, so if LtdCo retains £50k from earnings in 08-09, carries that over into year 09-10, and doesn't invoice but earns interest on the £50k, it will pay CT on the interest, but the initial £50k will be deemed as net of all company taxes. Correct?

Correct. You will not pay CT again on the original 50K.