Out of work and company accounts

**BolshieBastard** · 29 December 2012, 17:52

Originally posted by EngGirl View Post

Since the beginning of the financial year I have started and finished two contracts with a period of 2.5 months of not working in between. I've now just lost the second contract with nothing to move on to yet. During the periods I am not working, what expenses can I put through my business and does the fact that I have not been working for 3+ months affect the corporation tax I will pay? I am limited.
Thanks.

Provided your company bank account has sufficient money in it, you can still draw your weekly 'wage' and continue to draw dividends even though you are not working and your co has no money coming in.

Be careful though as you still need sufficient money to pay your CT.

As regards expenses, it's the same as when you are working ie the expenses must be 'wholly and exclusively' incurred in connection with the business ie you cannot put things like fuel, food, rent etc for everyday living through.

The final amount of CT is based on your co's net income so if you havent completed a financial year yet, having no money coming in will lessen it compared to having income for the full 52 weeks.

**malvolio** · 29 December 2012, 18:06

Not quite. CT is actually dependent on annual net profits - gross income less business expenses and salary (and not dividends). Pay the CT on that and what's left is availlable for retention or dividend payments. So don't pay divis unless you know you will have enough profit at year end to cover them or you have enough retained profits from last year in the company account. You also have to make sure you have enough in the bank for all the necessary taxes - PAYE, ErNICs, EeNICs, VAT and CT.

I'm guessing you don't have an accountant? Perhaps you should get one...

**BolshieBastard** · 30 December 2012, 14:22

Originally posted by malvolio View Post

Not quite. CT is actually dependent on annual net profits - gross income less business expenses and salary (and not dividends). Pay the CT on that and what's left is availlable for retention or dividend payments. So don't pay divis unless you know you will have enough profit at year end to cover them or you have enough retained profits from last year in the company account. You also have to make sure you have enough in the bank for all the necessary taxes - PAYE, ErNICs, EeNICs, VAT and CT.

I'm guessing you don't have an accountant? Perhaps you should get one...

Not quite me arse!

Out of work and company accounts