Paying less tax

salami1212 · 17 Dec 2013 at 20:50

Hi there,

*Puts on flame proof hat*

Righto, Now, I am in the process of setting up a business. Regarding paying taxes, I have set up a Limited company.

Would paying £9,439 (under the tax free allowance of £9,440) to myself. Then on all profits the company makes, paying 20% corporation tax be the most efficient way of paying the least amount of tax?

Also, regarding someone who works for me, is it possible to send them a nice gift straight to their bank account every month?

Thanks

Hyburnate · 17 Dec 2013 at 20:52

All bonuses are taxable, you would need to send them a gift before tax. (Many workplaces allow you to buy things as a bonus and therefore you don't pay tax + NI on the gift)

However, get an accountant. Nobody here can give you an answer.

Will Gill · 17 Dec 2013 at 20:54

Best way is to get an accountant and make sure you pay for investigation fees, I can't believe how much you can legally get away with. If the worst happens and they investigate you then you are covered and your accountant will have to prove his worth.

Simples

Haircut · 17 Dec 2013 at 20:55

So, are you planning on just living on your ~£9k salary then?

salami1212 · 17 Dec 2013 at 20:55

Ok cool, how much would an average accountant cost?

Haircut said:
So, are you planning on just living on your ~£9k salary then?

Maybe pay some nice dividends to myself or someone else, who knows..

Biohazard · 17 Dec 2013 at 20:57

A fiver

Will Gill · 17 Dec 2013 at 20:59

I pay about 650-800 a year depending on how much work I bother to do myself (which is usually nothing), if you are organised (I'm not) you can save a load of money by keeping everything in order, date order all your receipts etc..

And before people start moaning at the OP or anyone else for trying to avoid paying taxes, don't hate the player, hate the game. There are so many completely legal ways to reduce your tax bill if you chose not to pursue them then don't berate others for showing initiative.

salami1212 · 17 Dec 2013 at 21:03

Will Gill said:
I pay about 650-800 a year depending on how much work I bother to do myself (which is usually nothing), if you are organised (I'm not) you can save a load of money by keeping everything in order, date order all your receipts etc..

And before people start moaning at the OP or anyone else for trying to avoid paying taxes, don't hate the player, hate the game. There are so many completely legal ways to reduce your tax bill if you chose not to pursue them then don't berate others for showing initiative.

Top guy.. This is all a bit daunting I have to say.

Are there any sources you have used that you could link to me, or even some terms I could search on google to do my own research?

Haircut · 17 Dec 2013 at 21:03

salami1212 said:
Ok cool, how much would an average accountant cost?

Maybe pay some nice dividends to myself or someone else, who knows..

I presume you're aware that your dividends are taxable as well?
You do get some tax relief, so it works out tax free up to around £40k (whatever the 40% tax bracket starts at these days) and then it works out to an effective 25% tax on dividends beyond that, assuming you won't hit the 45% bracket.

As others have said, look at getting an accountant though. Mine costs about £1k per year + VAT. That seems to be about average compared with others I've spoken to though I'm sure you could find someone cheaper if you looked.

englishpremier · 17 Dec 2013 at 21:04

Well you'll lose 20% of the profits in tax, and then I think it's 10% on the dividends.

Depending on the amount it's still cheaper than paying yourself a massive salary. This is what most smaller business owners do.

Mynight · 17 Dec 2013 at 21:07

hypothetically if I were to do this I'd set myself up as a shareholder and maybe a friend and pay dividends up to say 32k on top of the below tax band wage of say 7k. Then said friend owes me quite a lot of money I loaned him years ago.

Dividends are currently taxed at 10% below £32,010 ceiling. Yet there is also a 10% tax credit on dividends.
source:
http://www.hmrc.gov.uk/taxon/uk.htm

As for "gifting" if its regular (time) "gifts" then HMRC would probally call it as payment and therefore tax evasion.

I can only iterate what others have said and pay an accountant. They make thier money doing this sort of stuff.

However if your setting up a new business maybe wait to hire an accountant as it may be unneeded expenditure.

Will Gill · 17 Dec 2013 at 21:08

salami1212 said:
Top guy.. This is all a bit daunting I have to say.

Are there any sources you have used that you could link to me, or even some terms I could search on google to do my own research?

Best advice is start paying an accountant, if you start researching things you might get misled. Mine saves me an absolute fortune on a monthly basis; best investment I've made in many years - that and becoming self employed :cool:

Raymond Lin · 17 Dec 2013 at 21:09

Get an accountant, saves you so much time (which is money) in the long run. Plus if it goes wrong, you can always sue him!

Regy53 · 17 Dec 2013 at 21:10

get an accountant. Your £600 bill will probably save your 10 x that amount if you pick a good one

englishpremier · 17 Dec 2013 at 21:15

As others have said an accountant will save you time, and they have the benefit of doing this stuff on a daily basis. Of course you could read all the info as its freely available then act on it yourself, but if your business is going to be earning a lot, then why bother. Just pay someone to do it for you.

salami1212 · 17 Dec 2013 at 21:17

Nice one guys, I shall look into an accountant.

*Takes off flame proof hat*

OpenToSuggestions · 17 Dec 2013 at 21:18

Glad to hear you're taking your advice from only an expert.

I know that if I was self employed I'd be seeking for any legit way to pay less in taxes.

Mynight · 17 Dec 2013 at 21:20

I will say one thing though. While I completely agree paying as little in tax as possible. Dont forget those services we sometimes take for granted and donate in ways. (emergency services).

If I could chose where my tax went I wouldn't hypothetically avoid paying it. I dont want to pay into a system that gives aid to countries that dont need it nor do I want to help pay MPs more

estebanrey · 17 Dec 2013 at 21:22

Dear GD, I want to set up a business and take as much money from my community as possible whilst paying as little back into it as I can.

[FnG]magnolia · 17 Dec 2013 at 21:23

salami1212 said:
Nice one guys, I shall look into an accountant.

*Takes off flame proof hat*

What? I don't think you understand how this is supposed to work :mad:

You're meant to post a question with a really obvious answer - in this case "get an Accountant you dummy" - but then rally against the good advice by continuing to ask for advice from people with no understanding of the complexities of the question in hand. Then, in 3 months, when you've been done for tax evasion you're supposed to come back and tell us about how your life fell apart and it's all our fault for not giving you good advice.

:mad: