My husband self employed. I need withdraw some money from his company for non business. like operation fee. What kind of tax should he pay and which sage account should he put in? it is direct loan or drawing?
we do not have much saving and his salary is ok if I don't have to do the operation.
If he's self employed then any money for personal use is drawings. You have thrown me a bit when you talk about salary though, as a self employed person doesn't have a salary.
I use Sage account 3001 for personal drawings as self employed sole trader, any profits from the business can be taken as drawings and the tax paid will be based on the profit made.
If it is a Limited company it is a totally different issue and would be put through as a directors loan
I am still struggling to understand which one should my husband be. self-employee or limited company. he register a limited company and he is the director. but he is a contractor and works for only one client. the hmrc ask him to pay self assessment tax and register as a self-employee. he paid corporation tax and vat, paye and NI. AS a company's director he paid his own salary and dividend.
hi Sharon Eyre,
if i Dr 3001
cr 1200
what should i put on the detail, pay person use?
and this is kind my husband's income?
so end of year pay corporation tax?
He is a company director, he is NOT self employed. Sounds as though you may have confused someone at HMRC with the way that you explained it to them.
Reading the situation he is very likely caught under IR35 legislation so everything would be deemed salary rather than dividends being available to him.
Remember that you have a fiduciary duty of care for the limited company the same as a partent has for a child.
As a director he will need to be registered for self assessment.
From the sound of matters he is already set up for PAYE, yes?
He must pay both EMPE and EMPR class 1 NI contributions.
If you do not understand how this works bundle up everything and take it to a good quality local accountant who will (at a cost) help you to put everything in place
Reading your message I'm assuming that using an accountant will pay for itself quickly in ensuring that you do everything correctly, claim what you are allowed to and avaoid any unneccessary fines, penalties, interest and surcharges.
kind regards,
Shaun.
__________________
Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
my husband paid income tax, employer NI and employee NI and self-employed class2. I use hmrc paye tools to caculate the salary tax. and paid them all. but i don't know why they ask my husband pay the class2 too.
I keep asking my husband hire an accountant to put everything in place. But he insist to let me study these stuff, and drive me crazy. please help me.
Well, that fact that company directors don't pay class 2 means that there's £140.40 that has been thrown away that could have been put towards an accountant straight away.
Some people think about the pennies to such an extent that they miss the pounds that they are losing.
There is a reason that it takes accountants five to ten years to pass their exams. Its not as your husband seems to think just adding a few figures up but there is a huge amount of knowledge behind that especially around tax regulation.
Maybe the thing to motivate him would be to tell him that his books and records must be available for inspection at the registered office at all times.
The smallest mistake in a return can result in an HMRC investigation and if they start to find incorrectly kept records they will wield the their full power at attempting not just to retrieve any underpaid tax but also pay for their time by imposiong penalties, interest and surcharges.
I read a figure the other day that suggested that the average return for HMRC from an investigation was £7,500.
Having an accountant would (a) ensure that things are done correctly and (b) HMRC knowing that you have an accountant will make them less likely to focus their attention upon you as you have properly qualified and experienced representation.
Your husband has the added issue that they may fall foul of something called IR35 legislation which treats all but 5% of applicable income as deemed salary meaning that dividends are not an option.
Is he claiming everything that he could or perhaps more than he should?
There are plenty of very good and reasonably priced accountants out there (also a few cowboys). I'm sure that he works wiith many people who have accountants who would be willing to give good recomendation. If not just post on here the area of the country that you are in and ask for a qualified accountant as we have quite a few chartered, chartered certified, incorporated and management accountants on the site.
Also many of the more advanced bookkeepers who offer full accounting services would be able to sort him out and for a one man limited no matter what the turnover I would imagine that in all instances you would get change (possibly quite a lot of it depending on the state of your records) out of £800.
I'm not trying to frighten him or belittle the work that you are doing to attempt to help him but getting a professional on board will save you a lot of headaches, sleepless nights and probably money as well (you would be saving £140 straight away on your class 2).
Hope that helps a little,
kind regards,
Shaun.
__________________
Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
