New MIP here needing some advice please

Hi,

I'm looking for confirmation that I'm not going out of my mind here.

I've recently started my own business with one client so far, in a few months its time to submit the annual returns, I'm completely confident in doing this in industry but have a few queries for self employed limited company owners.

Both directors will need to complete a self assessment form, I will submit the annual accounts and another party will submit the corporation tax return.

Surely they will end up paying 20% tax on the profits twice? Once on self assessment and once via corp tax?

Is this correct?

Thank you

Comments

  • StuartW
    StuartW Registered Posts: 472 Dedicated contributor ? ? ?
  • Vaioanimal10
    Vaioanimal10 Registered Posts: 9
    Thank you, apologies for submitting in incorrect area
  • CeeJaySix
    CeeJaySix Registered Posts: 645
    edited April 2015
    Vaio, it seems you may need to have another look at your tax books. The company pay corp tax on its tax-adjusted profits. The directors (who I am assuming are both shareholders) will pay personal tax only on their dividends, at their dividend marginal rate, not forgetting the 10% notional credit (ie if they're basic rate taxpayers there will be no personal tax to pay).

    Both the company and the directors will be saving NICs on the dividends compared to if the same amounts were drawn as salary, which is likely to result in a net saving.

    This is fairly basic stuff and really should be second nature if you're starting up on your own.
  • Vaioanimal10
    Vaioanimal10 Registered Posts: 9
    Thank you, but they are taking salary and not dividends, the self assessment form requires that the profits are entered and then 20% tax is paid on these profits after allowance and also NI, then the company also pays 20% on these profits or am I missing something here?
  • Gem7321
    Gem7321 MAAT, AAT Licensed Accountant Posts: 1,438
    edited April 2015
    I'm sorry to be blunt but yes you are seriously missing something! Were you granted your license in personal tax and financial accounts?
  • MarieNoelle
    MarieNoelle Moderator, MAAT, AAT Licensed Accountant Posts: 1,369
    edited April 2015
    What do you mean by "self employed limited company owners"? They are either directors/shareholders of a limited company or sole traders or in a partnership?

    If they are directors/shareholders you just need to fill in the employment pages (the employer being the Ltd co). The self-employment pages only apply to sole traders or partners.
  • Vaioanimal10
    Vaioanimal10 Registered Posts: 9
    Thank you for your responses, I have been going round in circles with myself, not wanting to miss anything and probably covering too many bases!

    Seems I have confused the two things.
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