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.