• Visitors can check out the Forum FAQ by clicking this link. You have to register before you can post: click the REGISTER link above to proceed. To start viewing messages, select the forum that you want to visit from the selection below. View our Forum Privacy Policy.
  • Want to receive the latest contracting news and advice straight to your inbox? Sign up to the ContractorUK newsletter here. Every sign up will also be entered into a draw to WIN £100 Amazon vouchers!

Tax on retained profit

Collapse
X
  •  
  • Filter
  • Time
  • Show
Clear All
new posts

    Tax on retained profit

    Hi there

    I haven't been able to find an existing thread that clearly answers paying CT on retained profit.

    Scenario...

    In an accounting year you make £80K
    - You decide for tax reasons to pay yourself £7K PAYE.
    - In order to keep CT down, you also then decide to take a dividend for £20K to not exceed the basic rate tax limit)
    - That leaves £53k retained in the Company (80-7-20 = £53K)

    Are you liable to pay any form of tax on the £53K, given you have decided to not taken it out in the form of PAYE or Dividends?

    Thanks

    #2
    Income tax? No.

    CT - yes, on the profit before dividends.
    ContractorUK Best Forum Adviser 2013

    Comment


      #3
      The basic maths behind this is:

      Turnover = £80k
      Less PAYE (Gross salary) = £7k
      Net profit = £73k

      CT @ 20% on profit = £14.6k

      Retained profits = £58.4k

      Retained profits is where you then take divi's from as Clare mentioned.

      Comment


        #4
        Please please please please tell me you have an accountant or are just about to get one!!!!

        EDIT : Your posting history makes from grim reading. You have had a LTD since 2011 and you have to ask when SA's are due. In 2012 you didn't know the difference between dividends and salary and now you don't even know how to account for dividends. You have got to be a troll, a poor one at that.
        Last edited by northernladuk; 27 June 2013, 17:10.
        'CUK forum personality of 2011 - Winner - Yes really!!!!

        Comment


          #5
          Originally posted by northernladuk View Post
          Please please please please tell me you have an accountant or are just about to get one!!!!

          EDIT : Your posting history makes from grim reading. You have had a LTD since 2011 and you have to ask when SA's are due. In 2012 you didn't know the difference between dividends and salary and now you don't even know how to account for dividends. You have got to be a troll, a poor one at that.
          ...or spent the money!

          Comment


            #6
            As others have said, I think you need an accountant, this guy comes recommended

            Darren J Upton | LinkedIn
            Originally posted by Stevie Wonder Boy
            I can't see any way to do it can you please advise?

            I want my account deleted and all of my information removed, I want to invoke my right to be forgotten.

            Comment


              #7
              Originally posted by SimonMac View Post
              As others have said, I think you need an accountant, this guy comes recommended

              Darren J Upton | LinkedIn
              Current:
              Taking a break
              Contracting: more of the money, less of the sh1t

              Comment


                #8
                Originally posted by kingcook View Post
                Current:
                Taking a break
                A nice long one somewhere crowded with a poor view.
                "You’re just a bad memory who doesn’t know when to go away" JR

                Comment


                  #9
                  Originally posted by SimonMac View Post
                  As others have said, I think you need an accountant, this guy comes recommended

                  Darren J Upton | LinkedIn
                  There might be a few years waiting period ...

                  Comment


                    #10
                    Originally posted by AtW View Post
                    There might be a few years waiting period ...
                    Two of my connections are still connected with him.

                    Comment

                    Working...
                    X