Clean It Up
UK Window Cleaning Forum => Window Cleaning Forum => Topic started by: Ian Lancaster on March 02, 2016, 05:28:13 pm
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Just got my 2016-2017 tax code, gone from 1050L to K114 :o
For those who are Ltd, we have always paid 20% corporation tax on company profits, then taken dividends which were not taxable. From April we will have to pay tax on dividends which have already been taxed!! So the bggures have worked out a way to tax us twice on the same money. Not only that but my private pension which is taxed before I get it is also being added to my taxable income >:( >:( >:(
Got my accountant looking into it but I reckon they're going to screw an additional 3 grand a year out of me.
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Really??
Just changing over from partnership to ltd. ::)roll
Sometimes you just can't get ahead in this country....
Darran
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It was the people like TV presenters who set themselves up as Ltd companies but only worked for one person (their previous employer) so they could channel their salaries through the company and not pay so much tax. HMRC have been trying to close this loophole for years and couldn't so they've changed the law!!
There is now virtually no difference between being Ltd or none-Ltd from the tax point of view so if that was why you were going Ltd you might like to re-consider.
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Just got my 2016-2017 tax code, gone from 1050L to K114 :o
For those who are Ltd, we have always paid 20% corporation tax on company profits, then taken dividends which were not taxable. From April we will have to pay tax on dividends which have already been taxed!! So the bggures have worked out a way to tax us twice on the same money. Not only that but my private pension which is taxed before I get it is also being added to my taxable income >:( >:( >:(
Got my accountant looking into it but I reckon they're going to screw an additional 3 grand a year out of me.
Ian i thought all dividends where taxable and always had been ?
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No, that was the advantage of being Ltd, in exchange for making your records public via Companies House you paid tax on company profits and then drew dividends afterwards. In that respect dividends were taxable but the tax was paid before the dividends were taken. Now you have to pay corporation tax on company profits (which includes the money which you will later draw as dividend) and then pay tax again when you draw it.
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So Ian, for you as a franchise, being ltd has no advantages now.
Holding your company responsible for your business debt rather than you personally isn't an advantage anyway as window cleaning doesn't follow the same 'rules' as other businesses do.
Am I understanding this is how it works in the UK.
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Dividends paid out have always been taxed am not 100% but it's around 5-8% as opposed to the 20% on ur normal income
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Here is a good explanation of the new rules on taxing dividends.........
http://www.itcontracting.com/new-dividend-tax-april-2016/
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I haven't worked out the difference but before the change there was a substantial saving. Don't forget that the biggest saving was in not paying NI.
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Dividends paid out have always been taxed am not 100% but it's around 5-8% as opposed to the 20% on ur normal income
Not true.
As Ian said, the company pays corporation tax of 20% on all profit then you can take your dividend tax free. This was the benefit of setting up as a ltd company, aswell as the NI savings. The negatives being having to publicly disclose your accounts and of course much higher accounting costs.
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Until last year, dividends had a notional tax applied. Of what, I can't remember. It's all changed now though.