Company directors on PAYE? Tax Q!
#1
Company directors on PAYE? Tax Q!
IR helpline now closed and I'll be too busy to queue tomorr, so, anyone know why the IR would have sent me a PAYE coding when I am a self employed company director? I kind of thought it would be a personal tax bill reckoning at the end of the year - dependent if the profits are taken as dividends or what, with additional expenses being deductible. Sorry bit new to this! D
#2
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iTrader: (2)
Everyone has a personal tax coding.
This is the amount of money you can earn "FOC" before getting taxed. Just under £5K iirc (spit).
It can be affected by unpaid tax or other "benefits" that you may have received the previous year.
However, it is an integral part of your earnings & you need that number so that you can work out your tax accurately.
This is the amount of money you can earn "FOC" before getting taxed. Just under £5K iirc (spit).
It can be affected by unpaid tax or other "benefits" that you may have received the previous year.
However, it is an integral part of your earnings & you need that number so that you can work out your tax accurately.
#5
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PAYE Coding Notic
Hi Tiggs,
Firstly a PAYE coding notice is as already said just a statement which tells you what your personal allowance for the year is. i.e you pay no tax up to that amount in a given tax year (2004/05 the basic allowance was £4745), but this can vary depending on what benefits and allowances you receive.
Anyway, as a director of a limited company, you do not necessarily have to receive a salary through the PAYE system. An alternative is to pay yourself through dividends, but this may be more or less expensive depending on which rate you are paying income tax at, and whether the company can fund these dividends.
Its strange to think of it, but for taxation, the company is a separate legal entity, even if you are the sole director and employee.
I would find your local friendly accountant for some advice, as there are certainly issues here which need discussing, and i have found from experience that most people on the IR helplines aren't that well versed in all the issues.
Hope i haven't confused you even more
Ash
Firstly a PAYE coding notice is as already said just a statement which tells you what your personal allowance for the year is. i.e you pay no tax up to that amount in a given tax year (2004/05 the basic allowance was £4745), but this can vary depending on what benefits and allowances you receive.
Anyway, as a director of a limited company, you do not necessarily have to receive a salary through the PAYE system. An alternative is to pay yourself through dividends, but this may be more or less expensive depending on which rate you are paying income tax at, and whether the company can fund these dividends.
Its strange to think of it, but for taxation, the company is a separate legal entity, even if you are the sole director and employee.
I would find your local friendly accountant for some advice, as there are certainly issues here which need discussing, and i have found from experience that most people on the IR helplines aren't that well versed in all the issues.
Hope i haven't confused you even more
Ash
#7
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Join Date: Nov 2001
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Director's dividend is the way to go - just pay yourself enough to make the minimum Nat. Ins. contribution and a token amount of tax, and take the rest of your wage as a dividend.
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