VAT Threshold

[Chris34]

How indeed do you NOT pay national insurance when it's part of your tax bill????

I'm no expert, but reading about dividend payments and Ltd companies.... basically you're working as an employee for the Ltd company, you draw the maximum wage per month that allows you to be within the tax free bracket, this is currently £12,570 per year, so you give yourself a wage of about £1k per month and it's tax free and National Insurance free (yes I know it's not exactly that but something close to that). Then at the end of the year you give yourself a lump dividend payment for the rest of your money that's in the Ltd account (you can leave it in there but just for example). The dividend payment is taxed at a different rate compared to income tax and you don't pay any NI on dividend payments.

 

[Pjj]

I'm no expert, but reading about dividend payments and Ltd companies.... basically you're working as an employee for the Ltd company, you draw the maximum wage per month that allows you to be within the tax free bracket, this is currently £12,570 per year, so you give yourself a wage of about £1k per month and it's tax free and National Insurance free (yes I know it's not exactly that but something close to that). Then at the end of the year you give yourself a lump dividend payment for the rest of your money that's in the Ltd account (you can leave it in there but just for example). The dividend payment is taxed at a different rate compared to income tax and you don't pay any NI on dividend payments.

Who could live on £1000 per month ?

 

[Part Timer]

Who could live on £1000 per month ?

Anyone that has a few quid put to one side, then when you get your dividend you replenish your account and more some if you have a good business

 

[Part Timer]

This is strange as far as I understood things you need a full 35 years of NI contributions to qualify for the full state pension they are every now and then making something of this in the papers.

I have 3 years, 1 being looked at, where they say I haven't paid enough but I've been Limited since 2009 and my company or myself haven't paid any NI

 

[Part Timer]

It sounds good but when you look at it for a sole operator it's not tax efficient.

Taking aside the low monthly salary to use up the individuals tax free personal allowance as this is tax free whether you're sole trader or a Ltd company (classed as a cost and when paid out it's the individual who uses the tax free allowance). A Ltd company making a profit of £50k has to pay 25% corporation tax. You then have to pay 8.75% tax up to £36,700 and then 33.75% tax on the remaining £700. So it's a total of £3211.25 + £236.25 = £3447.5 for the dividend payment and £12,500 for corporation tax, total = £15,947.5

Compare that to just running it as a sole trader and for your £50k of money (after the tax free allowance) you would pay something like 20% income tax and 6% National insurance. So that would work out at £7,539.8 for income tax up to £37,699 and £4,920.4 for 40% income tax on the remaining £12,301 and something like £3,000 for NI (trying to work out the national insurance brackets is a minefield I don't want to navigate this time of night, lol), so that's a total of £15,460.2 in tax and NI on that £50k (the tax free personal allowance is on top of this).

I think that's right anyway, off to bed. My heads spinning now, lol. ?

There are other benefits regarding tax like pensions if you're Ltd, and you don't pay 25% Corporation Tax if you're a "small" business, you will pay 19% if your profits are below £50k.

 

[Chris34]

There are other benefits regarding tax like pensions if you're Ltd, and you don't pay 25% Corporation Tax if you're a "small" business, you will pay 19% if your profits are below £50k.

Ahhh right, well spotted, that's because it was late and my head was spinning with figures. It was probably a good thing a few years ago but with the latest NI reductions there is probably not a lot that is of financial benefit for a sole operator especially after admin costs related to being Ltd. The only reason I can think for a Ltd company being beneficial for any business owner now is limited liability.

 

[dazmond]

Jeremy Hunt is planning on scrapping NICs altogether in a few years.....I bet they end up putting income tax up to 25%...?

 

[Iron Giant]

I have 3 years, 1 being looked at, where they say I haven't paid enough but I've been Limited since 2009 and my company or myself haven't paid any NI

You didn’t have to prove owt to me mate, I took your word for it, I was just going off what I had read in recent months

 

[Iron Giant]

Showing your age mate
Stamps haven’t been around for tax since I was young lol

I found this in the archives, was his first job

 

[Part Timer]

I hard a hard upbringing but wasn't working 3 years before I was born ?

 

[ched999uk]

Jeremy Hunt is planning on scrapping NICs altogether in a few years.....I bet they end up putting income tax up to 25%...?

It's probably because they are planning on scrapping the pension too!!!!!!

 

[Iron Giant]

I hard a hard upbringing but wasn't working 3 years before I was born ?

Oh well, I wasn't too far off.

 

[Dave B]

I hard a hard upbringing but wasn't working 3 years before I was born ?

I came from a broken family
My mum left before I was born
I’m the youngest of 3
Mum and dad were both older than me

 

[dazmond]

It's probably because they are planning on scrapping the pension too!!!!!!

I doubt it!what will all the old folk do?starve to death?it simply won't happen!

I reckon they'll raise the pension age to 69 or 70 though by the time I'm eligible...

 

[Iron Giant]

I doubt it!what will all the old folk do?starve to death?it simply won't happen!

I reckon they'll raise the pension age to 69 or 70 though by the time I'm eligible...

I agree it's been in place since 1909, and they won't drop it, but raising the pension age is already on the cards it's expected to rise to 68 in 2044 but more than likely it will go to 68-69 before that.

 

[Jaygti]

Jeremy Hunt is planning on scrapping NICs altogether in a few years.....I bet they end up putting income tax up to 25%...?

The idea is that an Nic cut helps working people only.
Whereas a tax cut helps everyone who pays tax. Including pensioners.

 

[Jaygti]

It's probably because they are planning on scrapping the pension too!!!!!!

No chance.
They can’t even scrap the triple lock (even though they’d like too).
Any government that tried it would be out of office for decades. ?

 

[Cleanco]

No chance.
They can’t even scrap the triple lock (even though they’d like too).
Any government that tried it would be out of office for decades. ?

They will never get rid per say but they are tryin to phase it out like they are doing with the smoking bans comin in. They will just keep putting back the retirement age to point where you will be on your last legs before you can claim anything which is basically the same as getting rid but over a longer period of time.

 

[dazmond]

The only people who want to retire early are those that hate their jobs or are too ill/injured to work.....

Work is good for overall general health esp if you can cut hours down to suit as you age....

 

[Cleanco]

The only people who want to retire early are those that hate their jobs or are too ill/injured to work.....

Work is good for overall general health esp if you can cut hours down to suit as you age....

Sod that. If I had the money I would retire now. I could think of plenty of things to keep me occupied if I had the funds to back it up. Unfortunately I’m no where near that yet. That said loads of my retired customers say they are bored sh1tless after the first few weeks but maybe they where forced into retirement rather than choosing it and if your finances are limited there’s only so much that you can do.

 

[Iron Giant]

Sod that. If I had the money I would retire now. I could think of plenty of things to keep me occupied if I had the funds to back it up. Unfortunately I’m no where near that yet. That said loads of my retired customers say they are bored sh1tless after the first few weeks but maybe they where forced into retirement rather than choosing it and if your finances are limited there’s only so much that you can do.

That's the crux of it the funds to back it up, most of my retired customers don't these days, as life is so expensive, you'd have to close to been a millionaire in 10-20 years time to fund a long retirement of 20 years and more.

They want you to save into a private pension to have you over to make money off you and boost the economy and business with investments then if you pop your cloggs with no defined spouse to go to or even family members for it to go but they will get paid less it's all a swindle.