Question of a new contractor!

[BEC]

Hi All,

I have registered a limited company with a company bank account from HSBC.
A company has paid my invoice £500 into my bank account.

However I know if I withdraw it as my salary, I will be asked to pay TAX.
So wondering if I could use this money to buy some thing without paying PAYE?

for example, can I buy clothes or food by using the company credit card without pay TAX/PAYE?

Thank you very much in advance for your advice!

Cheers,
BEC

[Clippy]

Welcome.

Yes, as long as you buy non-VAT items, you will not have to pay any tax on your Ltd income.

This is why most of us are wearing baby clothes and getting our daily news from newspapers.

[Peoplesoft bloke]

Hi All,

I have registered a limited company with a company bank account from HSBC.
A company has paid my invoice £500 into my bank account.

However I know if I withdraw it as my salary, I will be asked to pay TAX.
So wondering if I could use this money to buy some thing without paying PAYE?

for example, can I buy clothes or food by using the company credit card without pay TAX/PAYE?

Thank you very much in advance for your advice!

Cheers,
BEC

Yes also take care not to keep any records or receipts -- the tax people hate paperwork.

[thunderlizard]

oh you crazy guys you!

This guy is genuine - specifying the name of the bank is a salient Pasternakial detail that a troll wouldn't think of. And that was round about the first question I had when I started out.

Buying non-company things for yourself out of the company account looks a bit dodgy. If you need to eat and get some clothes on your back ASAP, you should guess how much tax you'd have to pay on the £500 in total; write yourself a cheque for the rest; then sort out the tax when you can afford an accountant, or at least after the dizziness has subsided.
I'd guess of your £500 you need to set aside £300 for tax and NI and things so you can take £200.

[chris79]

Just pay the whole lot out as a dividend at 21% corporation tax and buy your bread and milk with that?

[Purple Dalek]

Best get yourself an accountant. That'll cost you £500 at least. Problem solved.

[BEC]

Thanks guys,

Could you please make it clear, can I or not to use the money as expenses instead of pay myself?


Cheers,
BEC

[cojak]

Sorry, the only clear advice it - get yourself an accountant.

Otherwise, use the money or not. It's not your money (it's your company's) but it is your decision...

We are not accountants...

(But if you ask in the Accounting forum an accountant might reply)

[TheFaQQer]

Thanks guys,

Could you please make it clear, can I or not to use the money as expenses instead of pay myself?


Cheers,
BEC

Yes. However, you need to be careful that the things you are buying can be classed as expenses rather than a benefit in kind that you would pay tax on.

You could buy food, for example, if you are working away from home and staying away - if not, then you can't. You could buy some clothing, for example a high visibility vest if needed for your job, but not a suit.

HMRC produces a pretty hefty guide to what you can and can't claim for - however, an accountant should be able to tell you this. If you haven't got an accountant, it sounds like you'd better find one soon.

HTH.

[Manic]

Question is why your client pays your invoices daily, I assume by tomorrow you'll have £1000 in your account. It's likely that you forgot to charge VAT on that figure as well, then you'll have a bit more to spend, maybe a nice new car by the end of next week??

HTH