ltd, salary, tax etc

[J.C.E]

I am a limtied/vat reg comp- although it always gets me thinking/confussed!

Basically my accountant set me up to draw a salary of £680 odd so I am below the limit of income tax- I get this

I get a can take a dividence (and so does my mum as a shareholder) - i sort of get that

so does that mean- if I do not increase my salary above £680- i will not pay any income tax at end of tax year- and poss only NI?

obvisouly vat returns every 3 months- I undertstand

I undertstand this will possibly make getting my 1st mortgage a bit more tricky as not all lenders take the figures in a lim company into account and they want to base on a taken salary.

Also where does this put me in 100years time when I am retired and all my money is 'in the company' -how do I 'get my hands on it'

just looking to understand it all a bit more!

Ta

 

[SparkyChick]

As I understand it (I'm setup the same way), you will have to declare the dividends and pay capital gains tax on them. And obviously, if you're paying dividends you'll be needing to pay corporation tax (or whatever it's called) and the a portion of your expected tax bill for the next financial year.

You don't leave all the money in the company, that's what dividends are for... unless you're going to retain it to build a cash surplus for say hiring someone, take out what you don't need and invest it for your retirement... or maybe put down a sizeable deposit on a home

That's my limited understanding I'm yet to get my first years accounts out the way, but I'm dreading next year when it comes time for a tax return etc.

 

[Adj]

Getting a mortgage will be difficult with most lenders because you are in fact an employee (even though it's your company) on a very low salary.
Any money accrued within the company can be drawn down as salary or dividend over the years after retirement but you will pay tax after your standard allowances.
If you're sensible you will also run a sole proprietor non VAT business on the side for domestic jobs - legit of course.

 

[Andy-1960]

If you pay yourself a dividend, you still have to pay tax on the dividend albeit at a slightly lower rate than standard income tax.
As for your second question, you either sell your company or liquidate it.
Btw, how old will you be in 100 years and will you still be bothered about getting your hand on the money! Lol

 

[Octopus]

Getting a mortgage being SE or Ltd is probably as difficult as each other.

I remortgaged recently and our lender needed copies of the SA 20 from HMRC

As for being Ltd. The tax advantages were reduced by George Osborne about 3 years ago

 

[J.C.E]

If you pay yourself a dividend, you still have to pay tax on the dividend albeit at a slightly lower rate than standard income tax.
As for your second question, you either sell your company or liquidate it.
Btw, how old will you be in 100 years and will you still be bothered about getting your hand on the money! Lol

i am only 25 now- so wanted to keep the right side of the law- but keep as much money as I can in my pocket- but also bearing in mind I will want a mortgage within the next year or so

 

[Octopus]

If you want to get a mortgage you need about 3 years made up accounts by your accountant...... and a very big deposit

 

[J.C.E]

3 years- but they should base on the latest years figures
And I am working of the assumption- 10% deposit and a mortgage of 5x my lim com profit as apposed to my salary- and know its tricky this way but not impossible

 

[Octopus]

3 years- but they should base on the latest years figures
And I am working of the assumption- 10% deposit and a mortgage of 5x my lim com profit as apposed to my salary- and know its tricky this way but not impossible

I recommend you go and ask a few lenders ......... being young, having a company for only a couple of years IS going to be held against you.

 

[Leesparkykent]

3 years- but they should base on the latest years figures
And I am working of the assumption- 10% deposit and a mortgage of 5x my lim com profit as apposed to my salary- and know its tricky this way but not impossible

I've sent you a PM mate

 

[J.C.E]

I've sent you a PM mate

see! thats why i have always rated Lee more than you Murdoch!

 

[Octopus]

see! thats why i have always rated Lee more than you Murdoch!

I've no idea what he said in his PM, but what I've put on the open forum is for all to view - theres not much more to add.

I'm working with a builder ATM who can't get a mortgage ........ he has a deposit but his income is too low - I did try and suggest he declared more to HMRC, but he didn't like that suggestion.

 

[derek]

Having just got a mortgage myself I was told that the vast majority of lenders want to see a statement signed by an accountant showing, for a Ltd co, three years of turnover, profit and dividends payments before they will consider lending to a director based on their dividend earnings.

 

[Leesparkykent]

I've no idea what he said in his PM, but what I've put on the open forum is for all to view - theres not much more to add.

I'm working with a builder ATM who can't get a mortgage ........ he has a deposit but his income is too low - I did try and suggest he declared more to HMRC, but he didn't like that suggestion.

All it was mate is how I obtained a morgage with lack of accounts etc many moons ago.

 

[Squid]

For mortgage you usually need 2 years worth of accounts, the tax you pay is corporation tax and usually the minimum in NI contributions.

Speak to your accountant and broker, dependant on where you live s there is a difference between getting approved for a £300k mortgage and a £100k mortgage.

Remember to also maximise your expenses as these come out of the company pre tax deduction so you then pay less less corporation tax, keep all receipts and check your accountant what can be claimed.