It doesn’t. A Company pays Corporation Tax on its profits before dividends are paid out. Consequently, shareholders are treated as having already paid tax on their dividends (called a ‘tax credit’). A shareholder who is paying Higher Rate Tax will have the dividends...
Many director/shareholders borrow money from their Companies but, as long as they pay it back within 9 months of the following accounting year end date, there are no great tax implications. If it is not paid back by that deadline, a law called s.455, says the Company...
Transferring from a sole-trader or partnership, to a Limited Company is sometimes recommended by accountants for tax planning reasons or to benefit from Limited Liability and they will consider the following issues. When: Work out which side of a tax year end to...
Every person who is resident in the UK is given a personal allowance each tax year. It operates as follows: The personal allowance is the amount of income you can receive before paying tax – and it generally increases each tax year. For the 2019/20 tax year, it is...
You need to submit an Income Tax return if HMRC send you a Tax Return to complete or, if you know that you have income tax or capital gains tax to pay. However, HMRC have a list of further circumstances where a Tax Return should be prepared, including: Your income...
This tax is the result of an overdrawn Director’s Loan Account (DLA). Here is a brief explanation of how they can arise; the implications, and what to do. An overdrawn Director’s Loan Account (DLA) can often arise accidentally when a Director/shareholder takes money...