Hi guys,

This is my first post here and I must say that reading through the existing posts has been most helpful.

I have a few accounting questions.

Are financial services ltd companies exempt from vat on purchases for business use?
I understand that a ltd company can have a contract mobile as long as the mobile is registered in the company name, but do i need to pay vat on the monthly tariff?

And a bigger question...
I am a single person right now starting a financial services company. I believe I will be liable for corporation tax on net profit, but am i also taxed on my takings from the company? What is the best way to take an income from the profits with minimum tax liability.

Thanks in advance

Paul
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Financial Services as a supply are exempt supplies, this does not exempt you from all purchases.

You tax liability for salary / dividends will depend on you full circumstances to get the most efficient mix.

There are a number of discussions here on Salary vs Dividend for Salary extraction - do a search and you will find a number of threads on this.
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I am a single person right now starting a financial services company. I believe I will be liable for corporation tax on net profit, but am i also taxed on my takings from the company? What is the best way to take an income from the profits with minimum tax liability.

The company is liable to corporation tax on the net taxable profit.

If you have put money into the business it goes into a directors loan account and withdrawals from your directors loan account are not taxed as it is a repayment of your loan.

If you take a salary from the company then you need to be registered with HMRC for paye purposes and any salary taken is subject to income tax and national insurance deductions. If you have no other income then you can take up to the personal allowance without deduction of tax.

The best way to take income from the company net profit after tax is to take enough as salary too use up your personal allowance and take the rest as dividends.

When the company pays you a dividend you receive a dividend tax credit equivalent to 10/9 of the dividend paid.
Dividends are taxed as personal income at 10% up to the higher threshold tax limit which is offset by the dividend tax voucher. Above the higher earnings limit of ?4,800 tax is 32.5% which is only partly offset by the 10% dividend voucher.

Best policy.
1. Take a salary up to your personal allowance
2. Withdraw directors loan account if available
3. Declare a dividend of up to the higher threshold limit.

If you need more - cut your personal living expenses you are spending too much :D
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