If a limited company makes a net profit (before tax) of £6000, what would be the corporation tax liability?

Question

And is there any way I can reduce this? say, by paying dividends to the one director, or paying a salary etc? Many thanks

Answer 1

NO TAX

Answer 2

The previous responses are incorrect - the £10k small companies starting rate at 0% was abolished from 1 April 2006. In the current financial year to 31 March 2009, taxable profits are charged at 21%. The net profit is not always the same as taxable profits as there are adjustments for disallowed items and depreciation/capital allowances etc.

Dividends are not an allowable deduction for CT. If you pay a salary, it may push the employee/director into higher rate tax.

I would suggest you speak to an accountant to ensure you are operating the business as tax-efficiently as possible. Please contact me if you want further advice.

Answer 3

net profit is after tax and overheads