Reader’s question: As the sole director of my own company, if I pay myself £200 per week does this mean my corporation tax will be less? And what amount of dividends can I take?
Experts answer: This week’s expert answer comes from Neil Kellaway, Operations Manager at Intouch Accounting.
Reducing corporation tax
Paying yourself £200 a week does not directly reduce the corporation tax, and also depends on what you are paying yourself. If for example, this £200 a week was for salary, then the gross pay plus any employers National Insurance would be tax deductible against the profit of the company and therefore help reduce the corporation tax.
So if you were to pay yourself £200 in salary, this would have to be deducted before your dividend was calculated. The precise dividend allowed would depend on the monies in the business in the first place. Your limited company accountant would be able to calculate this for you.
Not every contractor’s personal or professional circumstances are exactly the same, that’s why it’s always advisable to ask your expert Personal Accountant directly for tailored advice that’s unique to you. Your own personal accountant will look at your specific case and can advise you appropriately.
More on corporation tax and how to account for it and a limited company directors guide to dividends.
Do you have a question that you need an expert answer to? Here is where you can ask your questions.
Follow Company Bug