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Ask Your Own Question, Chartered Certified Accountant
Category: Tax
Satisfied Customers: 6102
Experience:  FCCA - over 40 years experience as a qualified accountant (UK based Practitioner)
Type Your Tax Question Here... is online now

I am about to start contracting and need to know how much I

This answer was rated:

Hi, I am about to start contracting and need to know how much I will get after tax deduction If I run it through a limited company
JA: Which tax year is the deduction for?
Customer: 2019/2020
JA: Anything else you want the Accountant to know before I connect you?
Customer: Yes, what type of expenses I can include considering that I am doing software development

Hello and welcome to JustAnswer. I am here to help you. I am reviewing your question and will respond to you shortly.
Many thanks

Customer: replied 4 months ago.
Customer: replied 4 months ago.
Not now
Customer: replied 4 months ago.
My daily rate is 575
Customer: replied 4 months ago.
I am just wondering whether you only provide answers through calls?

Thank you for your question.

Let's presume that you would have a portfolio of clients in due course and that your income would not come from a single source i.e. one client.

As a working director of the company, your salary would be subject to tax deduction under PAYE. You could draw a salary and also have dividends paid to you from your company's taxed profits.

Your total income would be chargeable to income tax at 20%, 40%, 45% or a combination of all.

Dividends paid to you would be subject to income tax at 7.5%, 32.5%, 38.1% or a combination of all.

As far as the company is concerned, profits would be chargeable to corporation tax at 19%. Any salary drawn would be an allowable expense in the accounts of the company. Dividends are distribution of taxed profits and don't have an impact on company's tax liability.

Your after tax position would be become clearer once you decide how much you wish to draw out of the company.

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 4 months ago.
I am wondering whether I can include my accommodation rent, travel fees, shopping in the company expenses

Thank you for your reply.

If you were to work away from home on short assignments and had to spend nights staying at hotels, this cost would be allowable. Normal rent would not be allowable as it is not incurred wholly and exclusively for the purpose of your business.

The same would apply for daily travel costs from home to normal place of work and food shopping etc.

For an expense to be allowed, it has to be incurred wholly and exclusively for the purpose of business.

I hope this is helpful and answers your question.

If there are no more issues,I will appreciate if you would kindly rate my service positively/accept the service I have provided to ensure I get credited for it by Just Answer. and other Tax Specialists are ready to help you
Customer: replied 4 months ago.
thank you

I thank you for accepting my answer.

Best wishes.