Hello So I am a partner of a business, I'll get straight to the point. We each pay ourselves £20k/year as a wage, now I check it out and my tax would be £3500. The company will probably save £100k/year So since I own half of that do I get taxed on £70k? even tho I'm only paying myself 20k?
Buzincarl, Firstly, it depends whether your business is a sole trader, a partnership or a limited company. It sounds like you are indicating it may be a limited company.... If it is a partnership, I believe you split the profits. Then you are liable for share of the profits. With sole trader, similar situation. You can obviously deduct valid business expenses, which reduces your liability for tax. As a limited company, you can take money out as a salary or as dividend distributions. Each carry different tax implications. Monies remaining in the business may be classified as retained earnings and could be subject to corporate tax. warrior