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Corporation Tax on Limited Company

mds1256 Avatar
6y, 11m agoPosted 6 years, 11 months ago
Just wondering how you work out Corporation Tax, i see that it is 20% on taxable profits, but not sure how this works

e.g.

Turn over = £100,000
Profit = £50,000

What would the corporation tax and income tax be on this?
mds1256 Avatar
6y, 11m agoPosted 6 years, 11 months ago
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#1
[FONT=Verdana]I would suggest you link into a good accountant to look into this for, as the last thing you want is an inspection from HMRC as it can be quite painful.

HM Revenue & Customs: Corporation Tax
http://www.hmrc.gov.uk/ct/index.htm

Introduction to Corporation Tax | Business Link
http://www.businesslink.gov.uk/bdotg/action/layer?topicId=1082156148&r.s=as&r.l1=1073858808&r.lc=en&r.l3=1073865436&r.l2=1073859215&r.i=1073789619&r.t=RESOURCES&r.li=1083623697

Corporation and Income tax UK - Companies Limited
http://www.companies-limited.co.uk/companytax.asp

Cheers, Scotty Boy! :thumbsup:
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1 Like #2
Very quickly, my understanding is that 20% corp tax is paid on the entire £50k profit & there is no income tax on that.
However, if u pay yrself a salary from that profit eg. £25k then u pay that to yrself first, making yr final profits only £25k on which u then pay corp tax.
The £25k u paid yrself is then subject to income tax (& national insurance), which as u know is banded (or tiered). So on the first £6k of yr salary the tax is nil, then the next £19k is at 20%. If u pay yrself more then the next tax rate is 32.5% (can't remember the threshold amt), then finally any more than that is taxed at 40%.

Hope the abv helps.

Ps. I'm not an accountant, but just run a Ltd. Co.
#3
sajsaleem
Very quickly, my understanding is that 20% corp tax is paid on the entire £50k profit & there is no income tax on that.
However, if u pay yrself a salary from that profit eg. £25k then u pay that to yrself first, making yr final profits only £25k on which u then pay corp tax.
The £25k u paid yrself is then subject to income tax (& national insurance), which as u know is banded (or tiered). So on the first £6k of yr salary the tax is nil, then the next £19k is at 20%. If u pay yrself more then the next tax rate is 32.5% (can't remember the threshold amt), then finally any more than that is taxed at 40%.

Hope the abv helps.

Ps. I'm not an accountant, but just run a Ltd. Co.


Very clear Thanks!! rep left
#4
If you're an employee of your own ltd company you should be paying yourself minimum wage (to maximise your take home money).
#5
ficosaneil
If you're an employee of your own ltd company you should be paying yourself minimum wage (to maximise your take home money).


Any more tips :)

planning to start my own co. in the new year!

Cheers for the info. on corp tax. So the profit left after tax taken out remains the property of the business and is reinvested?
#6
...that is correct! I 'pay' myself £380 per month which comes to £4,560 on which I pay no tax.
U can then 'pay' yrself in other ways or take dividends (but I'm sure yr accountant with help u with that & be 'creative' in his accounting)

Remember: Tax AVOIDANCE is good - Tax EVASION is bad

Pay a little tax & keep the tax man off yr back - pay none & he'll be all over u like a bad rash!
#7
Hi there

Im currently qualifying as an accountant the small companies tax rate is 21% on profits under £300k.
#8
Jointy
Hi there

Im currently qualifying as an accountant the small companies tax rate is 21% on profits under £300k.


Hes right brea!
http://www.hmrc.gov.uk/rates/corp.htm
#9
5nowman
Any more tips :)

planning to start my own co. in the new year!

Cheers for the info. on corp tax. So the profit left after tax taken out remains the property of the business and is reinvested?


If you're VAT registered ALWAYS pay your bill on time and in full as the vat man has very strong power to get his money one way or another.

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