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TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15946
Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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, My ex husband has run a limited company past

Resolved Question:

My ex husband has run a limited company for the past three years and I have taken the amount of child support he has paid on trust. However, he has since mentioned he has to pay a corporation tax bill of 6k after which he has no money left. Is it possible to make a guesstimate of the income / dividend he must have drawn from the company in the last 12 months based on this tax bill? I thought it was the case that he would have had to pay himself a minimum salary to be entitled to draw a dividend. The reason I'm asking is that before I query the small amount of child support he's been paying, I'd like to have an idea of his likely net income. Many thanks.
Submitted: 2 years ago.
Category: Tax
Expert:  TonyTax replied 2 years ago.

There is no requirement for an individual to draw salary before they can draw dividend. Many small company director/shareholders draw a small salary to keep NIC charges down and a bigger dividend if the company has made a profit. If the company has a corporation tax liability of £6,000, then its taxable profits were £30,000 as CT is charged at 20%.

The figure of £30,000 would have been net of any salary your husband drew as salary is a deductible expense but not of dividends as they are not a deductible expense for corporation tax purposes. If he drew no salary, then he could have taken around £24,000 in dividends (£30,000 - £6,000) leaving nothing in the company bank account unless there were undrawn profits brought forward from a previous accounting period.

I hope this helps but let me know if you have any further questions.
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Customer: replied 2 years ago.

Ok thanks, ***** ***** he drew salary (he did before we split up) what is the total amount he could have drawn before NIC is payable, Years ago, I think it was about £460/ mth. Thanks

Expert:  TonyTax replied 2 years ago.
See section 3 here. The current threshold is £111 per week or £481 per month.