Newbie Expenses Question

[dspsyssts]

If you earn £5000 in a month and claim £2000 in expenses do you pay tax or NI on that £2000?

Or are you only taxed on the remaing £3000?

[Clare@InTouch]

You'll pay CT on the remaining £3,000.

You'll only pay personal tax on that £3,000 if you then withdraw it as a dividend.

The £2,000 in expenses, assuming they are allowable and not benefits in kind, should not give rise to any personal tax implications.


Edit: assuming you're a Limited company, not a brolly contractor

[dspsyssts]

Sorry should have said I am with a brolly.

Seems my take home is on par with PAYE calculators despite submitting about 30% in expenses each month.

[TykeMerc]

Sorry should have said I am with a brolly.

Seems my take home is on par with PAYE calculators despite submitting about 30% in expenses each month.

When working via an Umbrella expenses (I believe) are paid, then NI's (employees and employers) and tax are deducted from the remainder and you're paid what's left.

People often don't realise that the employers NI has to be paid and that's deducted from the rate which leaves quite a hole.