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Limited Company and Director Taxes – A Brief Overview

A brief introduction to the various tax liabilities of a small Limited and its Director………..

 

So, you’ve set up a new company, and you’re ready to go!

You’re keen to ensure you are keeping enough cash by to pay taxes so you don’t find yourself caught short. Great idea!

Until you try to get your head around the Limited Company and personal taxes involved…

Corporation tax, VAT, PAYE and NICs, Income tax, Dividend tax….. Argh!

Sound familiar? Feel daunted?

Let me start by saying that it isn’t just you, it is actually pretty confusing.

Why is it confusing?

Firstly there are a lot of different taxes. And secondly, you are dealing with both company and personal taxation liabilities at the same time.

Don’t worry! Over the next few articles I will try to explain, in a language you can understand, each of the taxes: what is it, who pays it, when is it paid, at what rate etc.

In this article I will simply break down what there is overall and who pays it…

Limited Company Pays

  • VAT (if registered)
  • Corporation Tax
  • Employer’s NICs
  • PAYE and Employee NICs (deducted from gross salary of Director and other employees)

Director Pays

  • Income tax on any self employed or other earnings not already taxed via PAYE
  • Income tax on any ‘benefits’ received from the company not taxed via PAYE
  • Tax on dividends received if gross taxable income exceeds £32,010 (for financial year April 2013-April 2014)
  • Additional Income tax and NICs on any ‘deemed salary’ from any contracts falling under IR35 legislation

 

 

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