Limited Company Tax Calculator
Use our calculator to estimate your corporate tax liability for the current or previous year and profits available for distribution as dividends.
Take home with limited company
Enter your annual income. Exclude expenses and VAT.
Specify tax year.
For easy comparison, the calculator automatically generates your estimated take-home income for both options simultaneously.
The calculation is based on the assumption that you are entitled to claim a personal allowance and earn a tax-efficient salary.
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Limited company tax calculator (Guide)
How does the Limited Company tax calculator work?
Corporation Tax must be paid on profits made by a limited corporation, excluding any reliefs claimed. The corporate tax rate is 25%. Companies have no personal allowance; therefore, all earnings are taxable.
A company's net taxable trading profit determines the amount of corporation tax you pay.
Because of the profit tax, you must calculate your net trading profit for the period. It may differ from the gain on your profit and loss statement because some things aren't included for corporation tax purposes—for example, annual investment allowance and different depreciation rates.
Assume your limited company’s revenue was £500,000 last year. You made a £300,000 profit after incurring £200,000 in expenses. You would owe £50,000 in corporation tax at 25%.
What taxes does your limited company pay?
Effective corporation tax, ranging between 19% and 25% (19% till 31 March 2023), is due on profits made by limited companies. If your contract isn't subject to IR35, you'll probably pay yourself a low wage plus dividends. Salaries are a tax-deductible business expense, but you'll have to pay corporation tax on your profit after deducting any allowances.
Dividends are paid from the company's after-tax retained profits.
How much is corporation tax for a limited company?
A corporation will pay corporate tax at:
19% for the financial year starting 1 April 2022
25% for the financial year starting on 1 April 2023
Small Profits Rate at 19% for the financial year commencing 1 April 2023
|Profit range||Marginal rate|
|From £0 to £50,000||19%|
|£50,001 to £249,999||26.5%|
|£250,000 or more||25%|
Your business must file a corporation tax return every year. All limited firms in the United Kingdom, including personal service companies, must pay corporation tax on their profits.
Employer's National Insurance Contributions (NICs)
This is calculated based on your gross wage and is estimated at 13.8% on earnings above £175 per week. It is paid monthly or quarterly, depending on the PAYE / NIC bill of the company.
If your contract falls under IR35, your income will increase due to your Employer's NIC bill.
VAT (Value Added Tax)
If your business is registered at the standard rate, you must charge 20% VAT on your invoices. You usually account for this every quarter, in most cases. You can claim input VAT paid on your company purchases as a deduction.
Certain businesses can register for the Flat Rate VAT scheme as small businesses, a government incentive to simplify VAT.
It implies you charge a standard rate of 20% on your invoices yet pay a reduced rate to HMRC. This charge is 16.5% if you are classified as a limited cost trader. Otherwise, your pay rate is determined by your profession.
Dividend tax-free allowance
The dividend allowance was lowered from £2,000 to £1,000 in April 2023. It implies that you can withdraw up to £1,000 in dividends as a shareholder before tax.
This allowance is tax-free but still uses £1,000 of your basic rate tax allowance.
How to complete a limited company tax return
Your company must file a tax return even if you make losses or have no Corporation Tax to pay. It includes calculating your corporation tax bill and your profit and loss for corporation tax. In addition to filing your yearly accounts with Companies House, your accountant can plan and file this on your behalf.
Your company's tax return has a 12-month deadline following the end of the accounting period it covers.
The payment date for your corporation tax bill usually is nine months and one day after the accounting period ends. For failing to meet these deadlines, HMRC imposes penalties.
How long should a limited company's tax records be kept?
You must keep financial and accounting records relevant to your limited company for six years from the end of the last business financial year they relate to and company records.
It comprises receipts, invoices, contracts, bank statements, and records of the company's money spent and received.
What are the key benefits of the Limited Company Calculator?
If you plan to contract through a limited company, you can use the limited company tax calculator to calculate your contractor's take-home income. A limited company salary calculator will determine your take-home pay, split between salary and dividends, based on your income.
It is helpful when comparing an umbrella company to a limited company.
Using the UK limited company tax calculator, you can quickly see the benefits of forming a limited liability company. It enables you to plan the foundation of your limited company and assess how much tax you can save by avoiding using an umbrella company.
When contrasted to sole traders, forming a limited corporation has a monetary cost:
Companies House charges £12 to register a limited company online (and more by post). Still, if you're unfamiliar with the process, you may even want to hire an accountant or consultant to help you.
Continuous professional assistance or software to keep good records might be costly.
Sole traders have lesser legal and administrative responsibilities to keep track of than the corporation. Consult an accountant to establish which legal structure suits your business model.
Companies House makes data about your limited company, including its directors and earnings, publicly available online.
Companies House will evaluate the papers and verify their legitimacy before registering/incorporating your company and issuing a Certificate of Incorporation with information such as:
The name of the business and its registration number
Its date of incorporation
Company type, i.e. Private Limited by Shares
The corporation's registered office is in England, Wales, Northern Ireland and Scotland.
In addition to corporation tax, other taxes such as VAT, National Insurance Contributions, import duties, or stamp duty could be payable.
Frequently Asked Questions
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You will have a dedicated accountant responsible for the delivery of the overall project. A small team of one to three persons usually assists your dedicated accountant.
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