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Ltd. Company reinvesting dividend allowance back into own company


chrismck

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Hello,

I am a new investor and understand you can take £3k out of your limited company into your personal name / year tax free as a dividend.

I have three questions relating to this.

1. really I would like to continue building money within the company to invest in further buy to let properties. Therefore is it possible to take the £3k from rent/ year and immediately re invest the money as back into the company so that you could take a tax free lump sum in the future as this would in effect be your company returning the money you lent it? Ie. The same as you can remove your initial deposit tax free

 

2. If there is another person with significant control who owns the other half of the company can they also take £3k as a tax free dividend and probably in a similar way?

3. What paperwork do you need to show to do this? Is it a letter from the director to the share holder to say the terms of the loan and so on?

 

Thanks very much for any help that you can offer!

 

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The first £2k of dividends an individual receives are taxed at 0%. Dividends are paid from distributable profits after the company has paid its corporation tax liability. If profits allow, then each shareholder could receive £2k of dividends. A company minute or simple loan agreement could be used to record a director to company loan. If you charge the company interest, CT61 forms should be completed and 20% income tax deducted from interest payments (this is potentially repayable if within 0% savings allowances). Your accountant or tax advisor should help with these elements. 

Jerome

Jerome@TaxAntics.co.uk

www.TaxAntics.co.uk
 

 

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