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taxadvisor.uk
taxadvisor.uk, Chartered Certified Accountant
Category: Tax
Satisfied Customers: 5015
Experience:  FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
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May I ask, how do I set up a company to pay only

Customer Question

Hello,
May I ask, how do I set up a company to pay only contributory tax, on my earnings, whereby I decide how much I am willing to pay ?
I understand this involves setting up a company abroad and transferring my pay through it and then back to myself here in England ?
Submitted: 1 year ago.
Category: Tax
Expert:  taxadvisor.uk replied 1 year ago.

Thank you for your question.

Are you UK resident for tax purposes?

Would the company pay dividends?

Many thanks

Customer: replied 1 year ago.
HelloCustomer , yes and yes to both questions
Expert:  taxadvisor.uk replied 1 year ago.

Thank you for your reply..

Companies pay corporation tax on profits and the rate is 20%.

If a company is established abroad, provided no business activity is conducted from the UK then these profits are not liable to UK corporation tax.

Any salary/dividend you receive from the company would be chargeable to UK income tax as UK residents pay tax on worldwide income and gains. You claim foreign tax credit relief for tax suffered on these earnings and gains.

As from this tax year there is dividends allowance and the first £5,000 of dividends is tax free.

Based on what your intention is to pay only contributory tax on your earnings, then your only option is to set a company overseas and draw a salary and dividends.

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.

Customer: replied 1 year ago.
Hello, thankyou very much for your reply, I do intend to respond properly, but at present I'm snowed under undertaking work on my company. I will respond possibly with further associated questions if that is acceptable. I will of course rate the service as you have requested. Kind regards
Expert:  taxadvisor.uk replied 1 year ago.

Thank you for your reply.

You can ask follow up questions once the answer is accepted by using the same thread.

Many thanks