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Leave profit alone or take a bonus

  • 03-12-2015 11:39PM
    #1
    Registered Users, Registered Users 2 Posts: 3,028 ✭✭✭


    Im a contractor with my own ltd company. I will have a profit in the business account at year end and wondered should I leave it there and pay Corp tax or pay myself a bonus. I'm already paying myself at the higher rate of income tax and I don't really need the extra cash. What's the most tax efficient thing to do?


Comments

  • Registered Users, Registered Users 2 Posts: 236 ✭✭adrianw


    At a very basic level if you have €1,000 profit you pay 12.5% tax leaving €875. Then when you do eventually take the cash out you'll pay circa 49% tax leaving €437.50. So effective rate of circa 56%.

    That's assuming no close company surcharge.


  • Registered Users, Registered Users 2 Posts: 945 ✭✭✭DmanDmythDledge


    All depends on the individual circumstance. Ideally, you would allow the reserves to build up in the company and claim retirement relief once you are in a position to do so. It's a very tough question on how best to advise without knowing every detail.


  • Registered Users, Registered Users 2 Posts: 2,671 ✭✭✭exaisle


    Undoubtedly the most tax efficient thing to do would be to go see a good accountant. No pun intended and it would be silly to take financial advice offered here...


  • Registered Users, Registered Users 2 Posts: 7,695 ✭✭✭the_pen_turner


    put it into your pension.

    or buy more tools etc


  • Registered Users, Registered Users 2 Posts: 22,461 ✭✭✭✭Pawwed Rig


    It would depend on a multitude of factors. Time for a tax planning meeting with your tax adviser i would think.


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