Kirkpatrick & Hopes - Succession Planning Accountants

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Email us: mail@kirkpatrickandhopes.com

Taking money out of your company

Taking money out of your company – for 2013-14 the amount is reduced 

For the 2012-13 tax year we advised a director / shareholder to take the following ‘optimum’ monthly amounts out of their personal company:

  • Salary £624 a month or £7,488 a year
  • Dividend £2,624 a month or £31,488 a year

This assumes, of course, that you are making sufficient profits to pay dividends of this amount.

This gives a total amount of £38,976 and you will pay no personal tax assuming you have no other income.

If a company is owned with your spouse, these amounts can be doubled.

The company saves Corporation Tax of £1,497 by paying a salary of £7,488.

The tax rates change from 6 April 2013 and our advice will also change on the amounts you can withdraw to avoid a personal tax bill.

The revised monthly amounts are:

  • Salary £641 a month or £7,692 a year
  • Dividend £2,532 a month or £30,384 a year

The increase in the national insurance threshold means that we can increase the salary paid.

This will mean that your company will now save Corporation Tax of £1,538 on the salary.

This gives a total amount of £38,076 from 6 April 2013 and you will pay no personal tax assuming you have no other income.  This is a reduction compared to the income paid in 2012/13. This is because the 40% tax threshold has not been increased.

If you want to keep the amounts paid to you the same as last year then you will have an annual tax bill of £225 to pay.

You can of course take more from your company but extra dividends will give you a higher tax bill, you may also pay extra tax if your household is in receipt of child benefit.

The tax free working from home allowance of £4 per week can be paid in addition to the above amounts.

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