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bigduckontax
bigduckontax, Accountant
Category: Tax
Satisfied Customers: 10840
Experience:  FCCA FCMA CGMA ACIS
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I work full-time on PAYE with local government and last year

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I work full-time on PAYE with local government and last year undertook some extra work. I had to register as a limited company which I did I found corporation tax papers. The company made approximately £6000+ or just over and I paid corporation tax of £900+
JA: Have you talked to a tax professional about this?
Customer: no I have I have now received a tax notice I didn’t to pay tax I didn’t realise that I had to pay income tax as well. It’s the first time I’ve done it
JA: Which tax year is this for?
Customer: I didn’t to pay tax I didn’t realise that I had to pay income tax as well. It’s the first time I’ve done it they said it needs to be paid by December 1st
JA: Is there anything else the Accountant should know before I connect you? Rest assured that they'll be able to help you.
Customer: Only that I am a full-time employee with local government and on a salary and pay PAYE

Did the company pay you anything?

Customer: replied 12 days ago.
I used the money in the bank account to pay bills. What I don’t understand is that if I’ve already paid tax. Why would I then have to pay again. I’m just very confused

Were they company bills or your personal bills?

Customer: replied 12 days ago.
Personal

Then you pay Income Tax (IT) on such payments and, furthermore, such paymants must be made through PAYE channels.

Customer: replied 12 days ago.
I will pay corporation tax on whole lot at 19 or 20%. Then I pay tax again on what’s left
Customer: replied 12 days ago.
I pay double tax on same declared earnings

You pay IT on what is distributed to you, yes and that is not subject to Corporation Tax (CT) anyway..

Customer: replied 12 days ago.
Eg I earned £6600. I did corporation tax return and after expenses was left with £5070. I paid corporation tax on that at £963.30. So when I do paye I declare (5050 minus £963) £4107 and I will pay tax on £4107. Is that correct ?

The company pays CT on the 6K less what was paid to you. You are liable to IT on what was paid to you. This should have been done through PAYE channels.

Customer: replied 12 days ago.
Ok.
I have looked at The notice from the tax office it says I need to complete a corporation tax return from the 19th of February to the 28th of February 2021. I’ve gone on the website and it doesn’t seem to allow me to do this

The CT retrurn runs with the company's accounting year which is why you cannot make a CT return.

Customer: replied 12 days ago.
Ok so if I earned nothing during the period should I say company was dormant

If the company earned nothing you could declare it dormant.

Customer: replied 12 days ago.
Thankyou and that means I can still continue to use it in next accounting period.

Indeed.

Customer: replied 12 days ago.
It’s so confusing.

Yes, try a session of accounting evening classes.

Customer: replied 12 days ago.
Just going back to the income tax. Does that effectively mean I’m going to end up paying another 20% on £4107 I earned as well as already having paid 20% corporation tax. So I’ll end up paying 40% on lot ?

No, because the money paid by the company to you is deducted from the CT laibility.

Customer: replied 12 days ago.
But As I used the money I will have to pay tax and national insurance on that so when I declare that on a self-assessment they will take the tax for me
Customer: replied 12 days ago.
I will need to register with HMRC for PAYE it is just myself

The company will have to register for PAYE.

Customer: replied 12 days ago.
But there will still be income tax to pay. So do you know how much approx that will be for £4107

It depends upon the tax code issued by HMRC.

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