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.