profits and new van

By : Forum Member
Published 20th March 2023 |
Read latest comment - 2nd June 2023

Afternoon all,

Two partners, none VAT.

If our profit was 40K, and we took out out 6K each. If our profit was 60K, and we took out out 18K each. How much tax would we pay on the 60K, would it be 20% on both after our 12K tax free thing ??? If so, why cant we just tell the taxman to 60K, is there a point in telling them what we take out each ??? 

Bought new van around 25K, bought with our private money, thus capital introduced. This is all in the books, but cos it was our personal money, can I claim that as an expense ??? But if I do, I have to put in 25K capital introduced, thus would not that counter the 25K for buying the van ???



Hi Frances

When you say "took out", it depends if as a salary or dividend. If salary then you will pay 20% after your £12k tax allowance until you reach the next threshold, assuming you don't have other income. If dividend, then this would come out after any declared profit and you would pay tax at the dividend rate - Tax on dividends

Van wise, that's one for your accountant as there are all sorts of tax implications. You can't just expense back £25k, unless you put the money into the business as a director's loan, and are drawing back the money. If the business was VAT registered, then you could have claimed the VAT back against the vehicle (assuming its owned and used by the business).

Deffo one for an accountant though, as there are a lot of variables and you don't want to upset HMRC.

Steve Richardson
Gaffer of My Local Services
My Local Services | Me on LinkedIn

Ok thank you.



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