Ltd Co - tax question
Ltd Co - tax question
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Discussion

IceBoy

Original Poster:

2,455 posts

252 months

Thursday 25th September 2008
quotequote all
Asuming the turnover is sub 300k.

What is the current level of tax on the profits ?

Cheers
IceBoy

Simpo Two

93,041 posts

296 months

Thursday 25th September 2008
quotequote all
What are the profits?

IceBoy

Original Poster:

2,455 posts

252 months

Thursday 25th September 2008
quotequote all
profits will be approx 60k for this business.

Simpo Two

93,041 posts

296 months

Thursday 25th September 2008
quotequote all
OK, now we're making progress. Where's Eric? And more importantly, where's your accountant?

The fact you didn't think to cite profit makes me wonder if you should really be looking beyond PAYE...

edb49

1,652 posts

236 months

Thursday 25th September 2008
quotequote all
Bottom rate is 20% on profits up to £300k

Top rate is 28% that's for profits above that - it is done progressively so £301k doesn't all go into the 28% rate.

Eric Mc

125,855 posts

296 months

Friday 26th September 2008
quotequote all
Corporation Tax is charged on the taxable business profits of the company, not the turnover.
Some multiu-million £ turnover companies pay no Corporation Tax on occasions because they have made a loss rather than a profit.

The Corporation Tax bands are currently as follows:

Y/E 31/03/07 Up to £300,000 - 19%. Between £300,000 and £1.5m - 32.75%. Over £1.5m - 30%

Y/E 31/03/08 Up to £300,000 - 20%. Between £300,000 and £1.5m - 32.5%. Over £1.5m - 30%

Y/E 31/03/09 Up to £300,000 - 21%. Between £300,000 and £1.5m - 29.75%. Over £1.5m - 28%

Y/E 31/03/10 Up to £1.5m - 22%. Over £1.5m - 28%.

As you can see, the rates have ben changing each year since 1 April 2006.

If a company has a financial year ended other than 31 March, its profits have to be split on a time apportioned basis between the relevant 31 March year ended and the different tax rates, bands and marginal rates applied.

It's all so simple really smile

roadsweeper

3,789 posts

305 months

Friday 26th September 2008
quotequote all
Eric Mc said:
Corporation Tax is charged on the taxable business profits of the company, not the turnover.
Some multiu-million £ turnover companies pay no Corporation Tax on occasions because they have made a loss rather than a profit.

The Corporation Tax bands are currently as follows:

Y/E 31/03/07 Up to £300,000 - 19%. Between £300,000 and £1.5m - 32.75%. Over £1.5m - 30%

Y/E 31/03/08 Up to £300,000 - 20%. Between £300,000 and £1.5m - 32.5%. Over £1.5m - 30%

Y/E 31/03/09 Up to £300,000 - 21%. Between £300,000 and £1.5m - 29.75%. Over £1.5m - 28%

Y/E 31/03/10 Up to £1.5m - 22%. Over £1.5m - 28%.

As you can see, the rates have ben changing each year since 1 April 2006.

If a company has a financial year ended other than 31 March, its profits have to be split on a time apportioned basis between the relevant 31 March year ended and the different tax rates, bands and marginal rates applied.

It's all so simple really smile
That really looks like they are raising the tax rates on small businesses and reducing it for larger companies makign bigger profits over the three years you have provided figures for. What are your thoughts on this - is that a fair representation or is something else going on that compensates for it?

IceBoy

Original Poster:

2,455 posts

252 months

Friday 26th September 2008
quotequote all
Eric,

Thanks.

Another one for you:

So:

1. I get taxed on my profits
2. I get taxed on my dividends (10% or is it 32.5%)

I'm going to be paying it all back out in tax !

Does anyone know what the allowance for having a home office is ? Does it depend on the size of the room or something ?

IceBoy

Eric Mc

125,855 posts

296 months

Friday 26th September 2008
quotequote all
IceBoy said:
Eric,

Thanks.

Another one for you:

So:

1. I get taxed on my profits

NO, your company gets taxed on its profits


2. I get taxed on my dividends (10% or is it 32.5%)

Not exactly - you are only taxed personally on your dividends if your personal income in the tax year is high enough to push you into the Higher Rate Tax Bracket. If that happens, that element of the dividend which is in that Higher Rate Bracket will be taxed at 32.5% If your personal income does not go over the Higher Tax threshold, you pay no tax whatsoever on the dividend.

I'm going to be paying it all back out in tax ! No you're not.

Does anyone know what the allowance for having a home office is ? Does it depend on the size of the room or something ?

Don't forget that putting costs through a limited company are a bit different than putting costs through a sole trader accounts. The company is not you. It is a separate legal entity.
Having said that, many limited companies operated from the director's/shareholder's home will feature a charge for "Business Use of Residence".

The best way to work this out is:

i) work out the number of habitable rooms in the house (excluding halls, toilets/bathrooms/utility rooms and garages).

ii) add up the annual cost of the household utilities - i.e. light, heat, water and council tax

iii) divide the total cost arrived at by the number of habitable rooms - usually between 4 and 6.

IceBoy

IceBoy

Original Poster:

2,455 posts

252 months

Sunday 28th September 2008
quotequote all
Thanks Eric Mc.