How much money can I withdraw from my limited company?
Discussion
A simple question, and I think that I know the answer but I haven't been able to find definitive confirmation.
For brevity, I'll use an example with round numbers to illustrate the point.
A small private limited company makes £100,000 profit after tax for the year.
The company has £300,000 cash in the bank.
I want the company to pay £100,000 into my pension scheme & also take £100,000 as a dividend.
The question: Can I take out the £200,000 since the company has sufficient cash reserves?
My uncertainty stems from the fact that if more that £100,000 is taken, this would mean a negative profit figure (loss) for the year, which I presume would not be allowed.
Over to you.
For brevity, I'll use an example with round numbers to illustrate the point.
A small private limited company makes £100,000 profit after tax for the year.
The company has £300,000 cash in the bank.
I want the company to pay £100,000 into my pension scheme & also take £100,000 as a dividend.
The question: Can I take out the £200,000 since the company has sufficient cash reserves?
My uncertainty stems from the fact that if more that £100,000 is taken, this would mean a negative profit figure (loss) for the year, which I presume would not be allowed.
Over to you.
It may be a simple question and on the face of it the answer is "yes", however there are some other considerations that I am sure you have thought of, but;
1. What pension contributions have you made in the last 3 tax years (including this one?)
2. Are you the only shareholder?
Also consider that the pension payment will come out of profits pre-tax.
1. What pension contributions have you made in the last 3 tax years (including this one?)
2. Are you the only shareholder?
Also consider that the pension payment will come out of profits pre-tax.
I'm being entirely serious.
Anyone running a company that doesn't understand the difference between retained profits and the current years accounts should be relying on an accountant and/or tax adviser for advice.
I'm also fairly certain that the OP doesn't understand the tax implications of paying himself 100k in dividends and 100k into a pension.
Anyone running a company that doesn't understand the difference between retained profits and the current years accounts should be relying on an accountant and/or tax adviser for advice.
I'm also fairly certain that the OP doesn't understand the tax implications of paying himself 100k in dividends and 100k into a pension.
hole troll.Olivera said:
I'm being entirely serious.
Anyone running a company that doesn't understand the difference between retained profits and the current years accounts should be relying on an accountant and/or tax adviser for advice.
I'm also fairly certain that the OP doesn't understand the tax implications of paying himself 100k in dividends and 100k into a pension.
Thanks for your concern. Anyone running a company that doesn't understand the difference between retained profits and the current years accounts should be relying on an accountant and/or tax adviser for advice.
I'm also fairly certain that the OP doesn't understand the tax implications of paying himself 100k in dividends and 100k into a pension.
I do have an accountant but didn't want to bother them with a simple question that I already knew the answer to but wanted confirmation to remove a nagging doubt about creating a potential paper loss on the annual accounts due to withdrawing too much money.
My accountant has already given me an answer on this as well.
I'm also well aware of the tax implications of pension contributions and dividend payments. Like I said in my OP the example was given using round figures for simplicity & brevity.
Thanks to everyone for your helpful comments.
Mandat said:
Thanks for your concern.
I do have an accountant but didn't want to bother them with a simple question that I already knew the answer to but wanted confirmation to remove a nagging doubt about creating a potential paper loss on the annual accounts due to withdrawing too much money.
My accountant has already given me an answer on this as well.
I'm also well aware of the tax implications of pension contributions and dividend payments. Like I said in my OP the example was given using round figures for simplicity & brevity.
Thanks to everyone for your helpful comments.
Good stuff, if you aren't sure then you should 100%, as you have done, use your accountant.I do have an accountant but didn't want to bother them with a simple question that I already knew the answer to but wanted confirmation to remove a nagging doubt about creating a potential paper loss on the annual accounts due to withdrawing too much money.
My accountant has already given me an answer on this as well.
I'm also well aware of the tax implications of pension contributions and dividend payments. Like I said in my OP the example was given using round figures for simplicity & brevity.
Thanks to everyone for your helpful comments.
Also consider spreading your dividends and pension contributions over this and the next tax year, this could save you a very substantial amount of money.
Olivera said:
I'm being entirely serious.
Anyone running a company that doesn't understand the difference between retained profits and the current years accounts should be relying on an accountant and/or tax adviser for advice.
I'm also fairly certain that the OP doesn't understand the tax implications of paying himself 100k in dividends and 100k into a pension.
I'm with you. OP has asked a pretty stupid question without enough detail for anyone to comment properly on.Anyone running a company that doesn't understand the difference between retained profits and the current years accounts should be relying on an accountant and/or tax adviser for advice.
I'm also fairly certain that the OP doesn't understand the tax implications of paying himself 100k in dividends and 100k into a pension.
Eric Mc said:
trickywoo said:
Eric Mc said:
One rule I have always tried to follow - if anybody asks for tax or accounting advice - don't reply in a rude or disparaging way
LOL. You are nearly always rude Eric, and fairdos in many cases for that.
Shouldn't have said rude, sorry.Gassing Station | Finance | Top of Page | What's New | My Stuff