Leave profit alone or take a bonus

xabi · 03-12-2015 11:39PM #1

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?

adrianw · 07-12-2015 09:33PM

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.

DmanDmythDledge · 08-12-2015 01:51AM

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.

exaisle · 08-12-2015 02:08AM

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...

the_pen_turner · 08-12-2015 02:10AM

put it into your pension.

or buy more tools etc

Pawwed Rig · 08-12-2015 08:01AM

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

Leave profit alone or take a bonus

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