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Topic Title: How much tax?
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Created On: 24 July 2013 05:00 PM
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 24 July 2013 05:00 PM
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misterben

Posts: 415
Joined: 11 June 2007

Hi all,
I have changed accountants this year basically because I wasn't getting much in the way of communication and a few other worrying errors! So I joined a bigger firm and seem to be paying rather a lot of tax! I am unsure if its because I had it too good using the old guy and now am paying what is normal? Would anyone be willing to tell me what tax should be payable on 25k net profit? As far as I know 20% after your personal allowance which is approx 8k? Therefore 20% of 17k. Is this right?

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Misterben
 24 July 2013 05:10 PM
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aligarjon

Posts: 2818
Joined: 09 September 2005

I'm not sure about personal allowance, it used to be about £80.00 a week so 4k, its probably a bit more now, maybe 5K at the most plus there's national insurance ? 20% of whats left is right.

Gary

-------------------------
Specialised Subject. The Bleedin Obvious. John Cleese
 24 July 2013 05:46 PM
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daveparry1

Posts: 6169
Joined: 04 July 2007

Personal allowance varies with age, for those born after 1948 it's just under 10 grand I believe,

Dave.
 24 July 2013 06:48 PM
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Grumpy

Posts: 427
Joined: 09 January 2009

Don't forget your class 4 NI if you're self employed.
 24 July 2013 07:54 PM
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sparkiemike

Posts: 1537
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Is your profit your salary - or do you pay yourself a salary and then take profit in addition to your salary?

Your personal allowance £9440

Basic rate is 20% (£0-£32010)

Higher rate is 40% (£32011-£150000)

So you should be able to earn £9440 with out paying tax, anything above £9440 upto £32010 will be taxed at 20%. In addition you need to pay your NI contributions, if you are LTD you can reduce this burden by paying yourself dividends, but your dividends (or company profits) are treated as salary and taxed at 20%
 24 July 2013 08:43 PM
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Grumpy

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The amount of Class 4 National Insurance contributions you have to pay for any tax year is based on your profits for that year. You pay 9 per cent on annual profits between £7,755 and £41,450 (2013-14) and 2 per cent on any profit over that amount.
 24 July 2013 10:48 PM
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TopTrumper

Posts: 172
Joined: 22 July 2006

misterben
go to the nearest mirror in your house and give yourself a big slap across the face, just to make sure your awake..
 25 July 2013 07:00 PM
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stateit

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Joined: 15 April 2005

Sparkiemike, Grumpy and TT (the last three posts) have summed up the situation really well.

You should form an LLP Tax Advisory company between yourselves.

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S George
http://www.sg-electrical.com
 25 July 2013 07:14 PM
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Grumpy

Posts: 427
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I'm in! Gotta be better than rummaging through the shrubbery trying to find the L:E fault in two garden lighting circuits!
 25 July 2013 08:00 PM
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sparkiemike

Posts: 1537
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Originally posted by: stateit
Sparkiemike, Grumpy and TT (the last three posts) have summed up the situation really well.

You should form an LLP Tax Advisory company between yourselves.


I am not sure that would be a good idea, it would probably be a case of "in the land of the blind the one eyed man is king"

The problem with "bigger" firms is that your accounts could be being prepared by a trainee who might not be able to see the bigger picture, so perhaps a call to the head honcho to see if all is as good as it could be?
 26 July 2013 06:06 PM
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davezawadi

Posts: 2642
Joined: 26 June 2002

You need to watch the accountant carefully. I once used one that seemed to get backhanders from HMRC! She tried not to include some purchases, vehicle costs etc. for nebulous reasons without foundation. Very strange. However if you can find a communicative one who works with small businesses you will be fine.

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David
CEng etc, don't ask, its a result not a question!
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