Self Employed- When to pay Employers tax?????

[dev106]

Hello friends,

I work as a contractor (engineer) thru my own limited company. By the end (November 2010) of my contract my total contracted income would be £30,600GBP, and that’s the time I’m going to apply for my tier-1 general.

I told my accountant about the new tier-1 rules that are going to be implemented from April, also about the earnings £30k=15 points matter. Listening to this he advised me to take the entire amount (£30k) as salary.

But, as I’m the director of my limited company, I also need to pay nearly 12% of the employer’s tax for the company earnings.

So, my total earnings itself are £30,600GBP, for this the accountant told me to pay £30,000GBP as salary till Nov or Dec to myself and apply for tier-1 General.

But, coming to the employer’s tax which would be roughly £3000GBP (for earnings in my case) that my company needs to pay to the tax man that would be in deficit (as there wont be any money left in the company account) after paying the complete £30k to me as salary, So for this my accountant advised me to pay the employers tax once after I get the visa and by giving loan to the company for paying the employers tax.

Could you please confirm me that is it ok if I take £30K as salary and also is it ok for my company to be in deficit while the time I apply for tier-1 general (as we need to submit the Profit Loss accounts, Balance Sheet of the company) and then pay the tax once I get my visa by giving loan to the company to pay the employers tax.

Please, moderators help me with this problem.

Many Thanks

Regards,

Newbieï

[John]

Not sure I understand the Accountant's advice? Why not take a much smaller amount of salary, and the rest as dividends? Am I missing something?

Have you already taken the money from the company? Or is it, at this moment, still in the company?

[dev106]

I’m still currently working and taking salary every month….

Is it not ok, if I do like the way I mentioned above for my tier-1 general visa???????

Regards,


Newbieï

[dev106]

Still waiting for reply....

Is it ok to do like this or not??

Regards,

newbie:-(

[Sushil-ACCA]

[quote="dev106"]Hello friends,

I work as a contractor (engineer) thru my own limited company. By the end (November 2010) of my contract my total contracted income would be £30,600GBP, and that’s the time I’m going to apply for my tier-1 general.

I told my accountant about the new tier-1 rules that are going to be implemented from April, also about the earnings £30k=15 points matter. Listening to this he advised me to take the entire amount (£30k) as salary.

But, as I’m the director of my limited company, I also need to pay nearly 12% of the employer’s tax for the company earnings.

So, my total earnings itself are £30,600GBP, for this the accountant told me to pay £30,000GBP as salary till Nov or Dec to myself and apply for tier-1 General.

But, coming to the employer’s tax which would be roughly £3000GBP (for earnings in my case) that my company needs to pay to the tax man that would be in deficit (as there wont be any money left in the company account) after paying the complete £30k to me as salary, So for this my accountant advised me to pay the employers tax once after I get the visa and by giving loan to the company for paying the employers tax.

Could you please confirm me that is it ok if I take £30K as salary and also is it ok for my company to be in deficit while the time I apply for tier-1 general (as we need to submit the Profit Loss accounts, Balance Sheet of the company) and then pay the tax once I get my visa by giving loan to the company to pay the employers tax.

Please, moderators help me with this problem.

Many Thanks

Regards,

Newbieï

[dev106]

Thanks for the fast reply sushil..but i'm still confused..

when u said tht 12.8% as employers tax.then anyway alltogether its coming to 22% nearly in the case of salaried employee( like me taking salary every month)..

whereas if i take dividends ..obviously I need to pay the corparation tax which would be 21% as u said...

so..either way I need to pay the employers tax which would be 12%tax..

I had the above discussion with my accountant and finally he advised me to take every penny as salary( that's wht I'm doing now)

Here are my queries,

1.Will HO not accept my payslips that shows 30k(till december even after paying tax for every month)

2. will HO not accept , if my company would be in deficit of 3000GBP at the end.?coz as we need to even submit our Profit/loss accounts and Balance sheet which shows the complete history of the company earnings.

I'm sorry mates..if I'm saking the same thing again n again.

Regards,

newbie;-(

[Sushil-ACCA]

Thanks for the fast reply sushil..but i'm still confused..

when u said tht 12.8% as employers tax.then anyway alltogether its coming to 22% nearly in the case of salaried employee( like me taking salary every month)..

whereas if i take dividends ..obviously I need to pay the corparation tax which would be 21% as u said...

so..either way I need to pay the employers tax which would be 12%tax..

I had the above discussion with my accountant and finally he advised me to take every penny as salary( that's wht I'm doing now)

Here are my queries,

1.Will HO not accept my payslips that shows 30k(till december even after paying tax for every month)

2. will HO not accept , if my company would be in deficit of 3000GBP at the end.?coz as we need to even submit our Profit/loss accounts and Balance sheet which shows the complete history of the company earnings.

Yes that why they ask sales summary - to coroborate earning

I'm sorry mates..if I'm saking the same thing again n again.

Regards,

newbie;-(

What i replied is best to get dividend , but u need earning for that

[PostMan]

The Accountant has given you advice based on what you what to do, to your personal advantage, irrespective of the consequences to the company.
The Company is an entity of its own merit. and if you wish there is another Director/Secretary in that company you will not be taking that, you cannot take £30k as salary since you are not paying yourself monthly, else payslip will be required.
As a Director you can take it as Dividend, this will further look into other expenses of the company, because you need to deduct all company expenses before taking your dividend.