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

 

[Leesparkykent]

Forgot to add an office in your house allows you a % to claim for bills, cleaner, window cleaner.

Only £4 a week IIRC.

 

[Squid]

Every £ is a prisoner.........

 

[derek]

Only £4 a week IIRC.

You can claim more than £4 per week for use of home as office, the £4 figure is the amount HMRC will accept without any proof being required and has those who use their kitchen table to do their paperwork in mind.
You could read the various BIMs in the HMRC website offering guidance on this, BIM47825 - Business Income Manual - HMRC internal manual - GOV.UK - https://www.gov.uk/hmrc-internal-manuals/business-income-manual/bim47825 would offer some examples especially if you have a room as a dedicated office.
You should check the possible consequences of Capital Gains Tax on business use on a property you own and then might sell at a later date, I was led to believe that this can be mitigated by allowing a small percentage (of the office or whatever else you are claiming for) for occasional private use, so for example my office could also be used to occasionally read a book in peace.

I would suggest you don't believe anything I have said and consult with a qualified chartered accountant.

 

[lurch]

amazing that people do not do there home work and start asking questions after the event. . have a look at this and google around abit. The internet is a valuable resource if used properly Sole Trader vs. Limited Company | Companies MadeSimple - https://www.companiesmadesimple.com/sole-trader-v-limited-company.html

 

[Octopus]

amazing that people do not do there home work and start asking questions after the event. . have a look at this and google around abit. The internet is a valuable resource if used properly Sole Trader vs. Limited Company | Companies MadeSimple - https://www.companiesmadesimple.com/sole-trader-v-limited-company.html

I've just used the calculator on that link - sure it suggests I would be slightly better off, but makes no allowance, as far as can see, for the additional time and / accountancy costs you will have to allow for or time that you will need to spend doing more work in the evenings.

Being SE means 1 return per year.

Ltd or VAT reg means much more to do ....................

 

[lurch]

I've just used the calculator on that link - sure it suggests I would be slightly better off, but makes no allowance, as far as can see, for the additional time and / accountancy costs you will have to allow for or time that you will need to spend doing more work in the evenings.

Being SE means 1 return per year.

Ltd or VAT reg means much more to do ....................

Yep agreed...... but one valuable element that you can' put a figure on is limited liabiliy.

 

[Leesparkykent]

You can claim more than £4 per week for use of home as office, the £4 figure is the amount HMRC will accept without any proof being required and has those who use their kitchen table to do their paperwork in mind.
You could read the various BIMs in the HMRC website offering guidance on this, BIM47825 - Business Income Manual - HMRC internal manual - GOV.UK - https://www.gov.uk/hmrc-internal-manuals/business-income-manual/bim47825 would offer some examples especially if you have a room as a dedicated office.
You should check the possible consequences of Capital Gains Tax on business use on a property you own and then might sell at a later date, I was led to believe that this can be mitigated by allowing a small percentage (of the office or whatever else you are claiming for) for occasional private use, so for example my office could also be used to occasionally read a book in peace.

I would suggest you don't believe anything I have said and consult with a qualified chartered accountant.

I have a charted accountant that deals with the lot and I don't operate from a spare room in the house, I have a seperate premises.

 

[Pete E]

I've just used the calculator on that link - sure it suggests I would be slightly better off, but makes no allowance, as far as can see, for the additional time and / accountancy costs you will have to allow for or time that you will need to spend doing more work in the evenings.

Being SE means 1 return per year.

Ltd or VAT reg means much more to do ....................

I think the other area that needs to be considered is if you go bust or if you are sued for a sum of money and end up with court orders and bailiffs chasing you...

As I understand it, if you operate as a Ltd Company, the bailiffs can't take personal possessions to pay debts but some one opereating as a sole trader could lose their car or house ect.???

 

[leo79]

If you're concerned about getting a mortgage then I suggest using a financial advisor.
I struggled like mad when I went from sole trader to Ltd company as all the banks I spoke to wouldn't consider my sole trader accounts (including the bank who I already had an existing mortgage with).
Just so happened I did a job for an FA whilst this was going on, within 3 weeks he's secured us a mortgage with The Coventry Building Society. Yes it cost us £300, but well worth it in my book.