Cleaning companies
and people involved in office
cleaning and cleaning companies in London
have to work extremely hard to make their business work, but if you
do make some money what is the best way to maximise what you earn?
Many of you may be operating your own limited company.
It might be:
Just you on your own
You and your partner / spouse
You and employees
One thing is sure – you have a company to earn a living and build a business.
So how much can you pay yourself?
Salary
From April 2011 you can pay a salary of £589 / month without paying any tax or NI.
At this level:
You do get National Insurance Credits towards some benefits e.g. pension
You do have to register as an employer and complete employers annual returns
You do not have to pay any tax or national insurance
This is a perfectly legal and acceptable way of paying yourself from your company
Dividends
One of the tax efficient ways to operate*as a shareholder of a limited company is to pay anything over and above the salary as dividends.
A dividend is the distribution of ‘after tax profits’ so it is essential that the company has sufficient retained profits to pay a dividend.
If this rule is not followed then the dividend could be viewed as an unlawful distribution of the company’s funds.
No additional income tax** is due on dividends received where the total income of the person is below the higher rate threshold.
The higher rate threshold from April 2011 is £35,000.
Assuming that you have no other income at all, you can pay a divided from the company of £31,866 before you pay any additional income tax.***
Other income covers interest received, rental income received, additional dividends etc
Total
On an annual basis you can pay:
salary of £589 / month = £7,068 / year
Net dividends from the company of £31,866
Total £38,934
Notes
*subject to your specific circumstances. We recommend you check with your accountant that this is best for you. This is a guide only and should not be relied upon for your tax planning.
**Corporation tax has been paid on the company profits at 21% until 31 March 2011 and 20% from 1 April 2011. So whilst the above is free from additional income tax, corporation tax has been paid on the profit where profit = income less costs (the salary is an allowable cost).
***Calculation for dividend – here is the maths!
Personal allowance £7,475
Higher earnings threshold £35,000
Gives total income of £42,475 before additional income tax is due
Salary of £7,068 leaves gross dividends of £35,407 to be paid
Net dividends (the amount paid from the company) £35,407 / 100 * 90 = £31,866
Many of you may be operating your own limited company.
It might be:
Just you on your own
You and your partner / spouse
You and employees
One thing is sure – you have a company to earn a living and build a business.
So how much can you pay yourself?
Salary
From April 2011 you can pay a salary of £589 / month without paying any tax or NI.
At this level:
You do get National Insurance Credits towards some benefits e.g. pension
You do have to register as an employer and complete employers annual returns
You do not have to pay any tax or national insurance
This is a perfectly legal and acceptable way of paying yourself from your company
Dividends
One of the tax efficient ways to operate*as a shareholder of a limited company is to pay anything over and above the salary as dividends.
A dividend is the distribution of ‘after tax profits’ so it is essential that the company has sufficient retained profits to pay a dividend.
If this rule is not followed then the dividend could be viewed as an unlawful distribution of the company’s funds.
No additional income tax** is due on dividends received where the total income of the person is below the higher rate threshold.
The higher rate threshold from April 2011 is £35,000.
Assuming that you have no other income at all, you can pay a divided from the company of £31,866 before you pay any additional income tax.***
Other income covers interest received, rental income received, additional dividends etc
Total
On an annual basis you can pay:
salary of £589 / month = £7,068 / year
Net dividends from the company of £31,866
Total £38,934
Notes
*subject to your specific circumstances. We recommend you check with your accountant that this is best for you. This is a guide only and should not be relied upon for your tax planning.
**Corporation tax has been paid on the company profits at 21% until 31 March 2011 and 20% from 1 April 2011. So whilst the above is free from additional income tax, corporation tax has been paid on the profit where profit = income less costs (the salary is an allowable cost).
***Calculation for dividend – here is the maths!
Personal allowance £7,475
Higher earnings threshold £35,000
Gives total income of £42,475 before additional income tax is due
Salary of £7,068 leaves gross dividends of £35,407 to be paid
Net dividends (the amount paid from the company) £35,407 / 100 * 90 = £31,866
ICS Cleaning are an office cleaning company in the UK, we use independent health and safety consultants to ensure we are up to date with current legislation : we invest a great deal in selecting the right staff, ensuring they have excellent ongoing training and support, meaning we can deliver excellent cleaning standards day in day out and remain one of the UK's leading cleaning companies
- www.ics-online.co.uk
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