Asad, thank you for your patience.
Here is my answer ...
Personal income tax
You can draw a salary of £880 per month (£10,560 pa) and there will be no income tax payable as it is covered by your personal allowance. On the other hand, if you were to draw a salary of up to £8,059 there will be no Income tax/NI payable.
Annual earnings between £8,060-£42,380 would attract employee’s NI at the rate of 12%.
Company corporation tax
Company pays corporation tax at the rate of 20% on all profits to £300,000.
Calculation of net income after tax based on current year tax rates
Company profit after salary of say £8,050 = £50,000
Corporation tax payable (50,000 x 20%) = £10,000
Company profits after tax (50,000-10,000) = £40,000
Dividends paid = £40,000
Retained profits = nil
Personal tax position
Salary = £8,050
Dividends paid (40,000+tax credit 4,444) = £44,444
Total income = £52,494
Personal allowance = £10,600
Taxable income = £41,894
Tax payable = £2,019
Net income after all taxes (8,050+40,000)-2,019 = £46,031
Changes from 6 Apr 2016
Some of the key changes that will impact small businesses in particular are set out below:
Taxation of dividend income from April 2016
The present 10% dividend tax credit is being abolished from April 2016. In its place an annual dividend tax allowance of £5,000 is being introduced. Dividends received will be free of further charge to Income Tax up to this limit. Above the £5,000 limit dividend income will be taxed as follows:
Basic rate tax payers at 7.5%
Higher rate (40%) tax payers at 32.5%, and
Additional rate (45%) tax payers at 38.1%
Shareholder directors of small companies that pay limited salaries and high dividends may be affected by this change and should review their dividend strategy.
National Insurance Employment Allowance
From April 2016 the present £2,000 allowance is being increased by 50% to £3,000. The Chancellor has also announced that the allowance will be withdrawn for one person shareholder/employee companies.
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.
Thanks... Okay, so lets say end of march next year. I have 50k in profit.
Do i physically give the £10k to hmrc for corporation tax. Then a seperate department deals with my tax i'd have to then pay £2019.
Is there any other simple tax savings the company or i can make?
Also sorry, if i am working from home as my office, can i claim back any portion of the rent/utility bills as over heads to bring the profit down and tax down?