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taxadvisor.uk, Chartered Certified Accountant
Category: Tax
Satisfied Customers: 4972
Experience:  FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
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Dear Sir or Madam I started locuming as a vet in February

Resolved Question:

Dear Sir or Madam

I started locuming as a vet in February this year, and had to set myself up as a limited company to do so. I didn't recieve any payment until April, at just over £5000. I am now in a permanent job so don't intend to locum again in the near future. I have registered on Government Gateway for tax self assessment and level 2 NI contributions. My home address is registered as the company address, and the roof has recently started leaking. Is it acceptable to claim building repair and work as a company expense? If not, can I pay myself the lump sum as a dividend (with no salary), and how do I make sure I'm paying the right amount of tax? So sorry for the lack of basic understanding!

Many thanks for your time

Rochelle Douglas
07934 949912
Submitted: 3 years ago.
Category: Tax
Expert:  taxadvisor.uk replied 3 years ago.
Hello and welcome to the site. Thank you for your question.

You have a few questions that need an answer
[q]
My home address is registered as the company address, and the roof has recently started leaking. Is it acceptable to claim building repair and work as a company expense

[a]
You can not claim this repair charge as a business expense as the property is primarily your private residence albeit the address acts as the company's registered office address. If the property were soley for business use then the costs would be allowable.

[q]
can I pay myself the lump sum as a dividend (with no salary), and how do I make sure I'm paying the right amount of tax? So sorry for the lack of basic understanding!

[a]
Yes you can pay your self a lump sum as dividend. Please bear in mind, you can only pay dividend out of taxed profits... If your only income is £5,000 and say after expenses the profit turns out to be £4,500. Then corporation tax would be £900 and you would have £3,600 available for distribution as dividends.

Dividends carry a notional tax charge of 10%. If your total income in a tax year remains at basic rate levels (£41,865 for 2014-15) then there is no further tax to be paid on dividends received.

If you are operating as LTD company then you should not be paying Class 2 NI as this is payable by self employed.

I hope this is helpful and answers your question.

If you have any other questions, please ask me before you rate my service – I’ll be happy to respond.


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Customer: replied 3 years ago.

Thankyou very much, that's really helpful. How do I go about paying the tax? If I complete a self assessment form online will it automatically come out of the company account? And once its been taxed at 20%, would I add the extra 10% for the dividend before or after doing a transfer to my personal account?


 


How do I cancel my NI contributions?


 


many thanks


 


Rochelle

Expert:  taxadvisor.uk replied 3 years ago.
Rochelle, thank you for your reply.

The tax (Corporation tax) will be paid once the company has filed it's CT600 return. It would come out of company bank account. I wuld advise you retain this potential CT liability in the company bank account for the time being.

You don't do anything about the 10% extra.. this is notional tax and not real. The company would have paid 20% tax on its profits before distribution of dividends.

You would only have to pay additional tax if you become a higher rate tax payer.

Write to NI Office to cancel your NU contributions.

I hope this is helpful and answers your question.
Customer: replied 3 years ago.

Thankyou so much, it finally makes sense!!

Expert:  taxadvisor.uk replied 3 years ago.
I thank you for acceptingmy answer.

Best wishes.

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