New MIP here needing some advice please

Vaioanimal10

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

StuartW

Hi @Vaioanimal10 - I've moved your question to the MIP sub-forum.

Vaioanimal10

Thank you, apologies for submitting in incorrect area

CeeJaySix

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

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

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

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

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.