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TonyTax
TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15979
Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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, My ex husband has run a limited company past

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Hi,
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.
Hi.

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 3 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

See section 3 here. The current threshold is £111 per week or £481 per month.