Could anyone help me understand the Uk tax framework in a little more clearly.
I've just setup a private limited company. I will have three sources of "income"; a Salary from the company, dividends drawn from the company profit and interest on some savings.
This is my understanding so far;
- I will pay "Income Tax" on the Salary and Savings interest, but; - I will not pay Income Tax on the first ~£6.3k ("Personal Allowance" combined Salary and Savings interest) BUT will pay 10% tax specifically on the Savings interest if the combined salary and savings is less than ~£2.4k - Income tax will be 20% of the combined Salary and Savings interest between ~£6.4k to ~£40k - A further tax of 40% will be levied on any combined Salary and Savings interest above ~£40k
- I will pay National Insurance on the Salary (but not the Savings interest), at the following rate; - nothing, if the Salary (excluding savings interest) is £43.8k, then an additional levy of 1% is payable on the amounts over the £43.8k
Corporation Tax is applied to Net Company Profits (less any Expenses and Charges on Income... more later...) at 21%
Dividends can be taken as income from whatever Profit is left after Corporation Tax, and are subject to the following tax - if Total Income (in my case Salary plus Savings interest)