please advise on limited company / ho

[donvigeo]

I have a limited company with the intention of using it to take care of my tier 1 general renewal later in year.

I have not taking salary from this company account since inception, but I do draw money from it for my personal needs and recoup back as soon as a client pays me.

I purposely do this so that I don’t get taxed on salary as I intend to make all earnings as dividends for better tax advantage

I want to find out if drawing from bussiness often ( say 7 times ) before the end of company account financial year will still attracts a corporation tax of 21 % one off.

Can drawing from business each time have any higher tax implication.- if yes please kindly enlighten me

Will taken all profits as dividends allowable under HO rules?

Please guys advise

[Sushil-ACCA]

I have a limited company with the intention of using it to take care of my tier 1 general renewal later in year.

I have not taking salary from this company account since inception, but I do draw money from it for my personal needs and recoup back as soon as a client pays me.

I purposely do this so that I don’t get taxed on salary as I intend to make all earnings as dividends for better tax advantage

I want to find out if drawing from bussiness often ( say 7 times ) before the end of company account financial year will still attracts a corporation tax of 21 % one off.

Can drawing from business each time have any higher tax implication.- if yes please kindly enlighten me

Will taken all profits as dividends allowable under HO rules?

Please guys advise

if U r drawing money from business account will be treated as loan and when dividend is paid to u it will be sett off against loan , u will be fine

but u need a good accountant to manage the process till yr visa application

[John]

I purposely do this so that I don’t get taxed on salary as I intend to make all earnings as dividends for better tax advantage

From the tax point of view, that is not logical at all. Indeed it is tax inefficient, and unnecessarily increasing the amount of Corporation Tax payable by your company.

Instead it would be far better to take a salary but to limit that to the maximum amount that can be extracted tax-free and indeed NI-free. In the current tax year, 2010-2011, that is £110 per week, and on an annual basis that is of course £5720.

That is, if your company paid you a monthly salary of say £476, there would be no tax and no NI deducted, so the net amount would also be £476. And your company would have slightly lower profits, and thus pay less Corporation Tax, compared to if you took no salary at all.

donvigeo, you do not say the nature of your business but as necessary presumably you have taken advice about the anti-avoidance legislation commonly known as IR35?

[HSK Accountancy Services]

I have a limited company with the intention of using it to take care of my tier 1 general renewal later in year.

I have not taking salary from this company account since inception, but I do draw money from it for my personal needs and recoup back as soon as a client pays me.

I purposely do this so that I don’t get taxed on salary as I intend to make all earnings as dividends for better tax advantage

I want to find out if drawing from bussiness often ( say 7 times ) before the end of company account financial year will still attracts a corporation tax of 21 % one off.

Can drawing from business each time have any higher tax implication.- if yes please kindly enlighten me

Will taken all profits as dividends allowable under HO rules?

Please guys advise

Further from advice given above also note that everytime you take money out from company's account (which is not salary or dividend) then it is treated as Loan to director and on that amount you have to pay interest . This is tax man's favourite topic so they will be happy to know about that!

Interest is calculated on daily basis. Your accountant should be able to help you on this.

[donvigeo]

Many thanks Guyz

But honestly what is the way out of this? How do i go about withdrawing money without incurring the wrath of tax man and as well enjoy same tax advantage.