Tax efficiency

You figures for the dividend payment scheme aren't quite correct. You pay yourself a base PAYE salary of £12,570 less NI contributions which is currently about £732 per month. Then any money after that can be taken with dividends (as long as you are in profit) which is firstly taxed at corporation tax amounts, then, you also pay 7.5% on any dividends you take and declare them as part of your personal tax each year self assessment. You do get £2000 tax free but that's it. 

There's a whole back story to this scheme, which included Sunk and how he treated small company directors. I saw some figure where taken something like £35k per year via this scheme, or taken the equivalent amount out via PAYE is only a small difference now. But, it does help with flexibility. 

There's plenty more information on here, although it's a little out of date with next years 8.5% tax on dividends as that's just been scrapped and will stay at 7.5%

https://www.crunch.co.uk/knowledge-tax/what-tax-do-i-pay-on-dividends 

btw the Intuit staffers on here will just copy and paste a standard reply about speaking to an accountant.

You get one of two replies from them typically. A copy and pasted answer, or, they tell you it's currently getting fixed. 

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@Enzo3885 wrote:

Hi all,

But what if I use the company money for personal purchases instead of giving myself dividends? Would this be more tax efficient? Assuming this is doable, is there anything I'm not allowed to purchase through the company? Do purchase need to be justified?

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Much more tax efficient ... that's why it's called fraud or embezzlement - depending on your viewpoint :smileyvery-happy:

(& your viewpoint will be from the dock!)

The business can ONLY purchases goods/services that are actually used in the business.

Their are some cases where you can claim a percentage business/private use & split the costs accordingly - but the taxman tends to take a close look at the justification for any splits.

Hello Enzo3885,

Welcome to the Community page, 

We would advise you speak to a trained and qualified accountant about this and on how best to enter it into your account as we are not trained accountants just technical support here.