How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site. Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask bigduckontax Your Own Question
bigduckontax, Accountant
Category: Tax
Satisfied Customers: 4950
Type Your Tax Question Here...
bigduckontax is online now

My company is a limited company , I pay 20percent tax on all

Customer Question

My company is a limited company , I pay 20percent tax on all my profit through CIS tax . I have an accountant which I think has done a mistake as I have an 11k corperate tax bill even though i earned 48k in a year is this correct ?
Submitted: 4 years ago.
Category: Tax
Expert:  bigduckontax replied 4 years ago.
Hello, I'm Keith and happy to help you with your question.

Can you clarify your question please. You may be mixing Corporation Tax with Income Tax. What was the company's profit for tax? What was your personal income for tax.
Customer: replied 4 years ago.

The company made 45k profit , I have a set wage of £500.00p a month to be under the tax limited . What confuses me is that if every time I get a payment and 20% is deducted every time why am I paying another 20% in corporation tax . This means I am paying 40% does it not .

Expert:  bigduckontax replied 4 years ago.
Assuming that that 45K profit is the net profit than the Corporation Tax would be 9K. If the company is taking 20% flat from your wages then they are deducting Income Tax (IT) at source. If you are a director of the company then you are an employee per se and should be paid under PAYE. The personal IT can be reclaimed through HMRC channels when you make your annual assessment return. Were the company registered for PAYE and operating it correctly then your tax code would be 944 and no IT deductions made.
Customer: replied 4 years ago.

I am on paye with the wages but the company gets taxed 20% on all earnings . I never changed the tax deduction scheme when I made the company LTD . I preferred this as I would always get a rebate and never owe any tax . The inland revenue know they owe me a rebate but I was thinking that the corporate tax was very high .

Expert:  bigduckontax replied 4 years ago.
No, the Company gets taxed at a flat rate of CT of 20% on profits not necessarily earnings. Inland Revenue and HM Customs and Excise were merged some years ago to form HMRC. Your tax office should have issued the necessary code, in your case probably 944, to enable correct PAYE deductions, ie in nil in your case, to be made. You should request a proper coding if one is already not in place.

The wages paid by the company to you are an allowable expense in arriving at the profit liable to CT.