Taking Money Out

                        UK Limited Company - Taking Money Out

If you want the company to pay you a salary, expenses or benefits, you must register the company as an employer with HM Revenue and Customs

The company must take Income Tax and National Insurance contributions from your salary payments and pay these to HMRC, along with employers’ National Insurance contributions.

If you or one of your employees makes personal use of something that belongs to the business, you must report it as a benefit and pay any tax due.

Dividends

A dividend is a payment a company can make to shareholders if it has made enough profit.

You can’t count dividends as business costs when you work out your Corporation Tax.

Your company mustn’t pay out more in dividends than its available profits from current and previous financial years.

You must usually pay dividends to all shareholders.

To pay a dividend, you must:

hold a directors’ meeting to ‘declare’ the dividend

keep minutes of the meeting, even if you’re the only director

Dividend paperwork

For each dividend payment the company makes, you must write up a dividend voucher showing the: date, company name, names of the shareholders being paid a dividend, amount of the dividend.

You must give a copy of the voucher to recipients of the dividend and keep a copy for your company’s records.

Tax on dividends

Your company doesn’t need to pay tax on dividend payments. But shareholders may have to pay Income Tax if they’re over £5,000.

For dividends above £5000, one will pay at a basic rate of 7.5% for dividend up to £32,000 and a higher rate for dividend up to £43,000.

Director Responsibilities

         UK Limited Company - Director Responsibilities

If you have set up a limited company, there are a number of duties you will have for e.g. legal and financial responsibilities, if you are a director of a company. The Companies Act of 2006 outlines some of the duties of a company director

Duties of limited company directors

Duty to act within your powers as a company director

Duty to promote the success of your company

Duty to exercise independent judgment

Duty to exercise reasonable care, skill and diligence

Duty to avoid conflicts of interest

Duty not to accept benefits from third parties

Duty to declare interest in proposed transaction or arrangement with the company

Financial Responsibilities

As a company director, you have several accounting-related obligations. Although you should employ a business accountant to perform all (or most) of these tasks, you are ultimately responsible to ensure that all tasks are carried out:

Keep good accounting records from which accounts can be prepared which give a true and fair representation of the financial position of the company.

You must submit accurate company accounts, and file them on time with Companies House.

You must submit your corporation tax return (Form CT600) to HMRC and pay any tax liabilities due.

You must deal with the correct payment of staff (and yourself) – including the deduction of income tax and national insurance contributions, where they apply.

You must trade solvently, ensuring that you are able to meet the financial liabilities of your business. Legal responsibilities of company directors

You are responsible for completing and filing a Confirmation Statement or annual statement every year as it was previously called.

To produce and maintain a register of Persons with Significant Control (also known as a “PSC register”). The PSC Register must be filed, as part of the Confirmation Statement, with Companies House annually.

To submit forms to Companies House to notify of any changes in the particulars of company director(s) or company secretary.

Notify Companies House if you change your registered company address.

You must always act in the interests of the company shareholders. This means that the directors cannot enrich themselves in a way that damages the company.