Self Assessment vs Corporation Tax

[AMurph]

I was self employed for several years, then recently set up a Community Interest Company. Now, all my my work and income goes through the company and I pay Corporation tax annually. What to do with the Self Assessment?

I generally find these things baffling. HMRC have redirected me several times to their website as all the info is there, apparently!

Any advice appreciated

[SteLacca]

You and the company are separate legal entities with your own respective obligations and liabilities.

How are the profits of the company distributed? As salary, dividends, or not at all. Any money taken for personal use from the company represents personal income and is reportable on your self-assessment Return (and taxed accordingly). This is irrespective of corporation tax having been paid.

If you aren't clear on this you are almost certainly not acting tax efficiently, and would be well advised to consult an accountant (though in all honesty, it's probably a bit late in the day for 2016/17, since most accountants are likely to bogged down with the 31 January rush, now).

[AMurph]

I absolutely don't understand it, then. I already pay tax on the company account for money coming in.

Is there any handy resource where all this is clarified, ideally in graph or chart form?

[bd6759]

The company pays tax in its profits. Profits are the excess of income over expenditure, as shown in the profir and loss account. If you take a wage from the company, that is an expense. The company does not pay tax on that amount. You will pay income tax on your wage.

If you don't take a wage, or in addition to your wage, you may take a share of the profit. This is usually in the form of the dividend. This is called a distribution of profits. You also pay tax on this, but a much lower rate.

If you find these things baffling, why set up a company, and why not have an accountant?

[AMurph]

I was following a dream but it's turning into a nightmare and I regret doing it now. We do have an accountant for the company and all is in order, I just can't square tax paid there with an additional self assessment.

If anyone has any suggestions for basic useful resources / flowcharts / graphs / charts for comprehending the basics I'd appreciate it. The dense, endless text of HMRC seems to lead me further from a resolution!

>>If you find these things baffling, why set up a company, and why not have an accountant?