Artists tax exemption and separate company with income

What about the site, could you develop or add value to this? It’s another non income producing asset you have, is there a reason you’re holding onto it as planning permission only lasts a certain length of time.
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A company can't get it so there must be some very odd structure.

1) He invoices the first €50k of work himself and puts the rest through the company.
2) He sells his art to the company so he gets the €50k exemption.
 
flyingfolly said:
I also get the artists exemption and as far as I'm aware it can't be applied to a company? Only as a personal tax exemption?
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Yes, I've since checked with the accountant and our exemption income is completely unrelated to company income and it's true companies cannot avail of this, only the exempted person.
 
MelF said:
What about the site, could you develop or add value to this? It’s another non income producing asset you have, is there a reason you’re holding onto it as planning permission only lasts a certain length of time.
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We're not sure what to do with it to be honest, were thinking of hanging on to it in case our son might want to build on it down the line, but he's in his early teens so it's a long way off yet.
 
barrabus said:
We're not sure what to do with it to be honest, were thinking of hanging on to it in case our son might want to build on it down the line, but he's in his early teens so it's a long way off yet.
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Well afaik there’s a land tax on the horizon which might make holding and not developing it a more costly strategy depending on its size and how much you might have to pay per year so maybe selling that might be a consideration? Though it doesn’t help with diversifying.
 
Hello, I did a money makeover post a while back about my tax status https://www.askaboutmoney.com/threads/too-tax-efficient.237343/ and the general consensus seemed that the tax treatment of pensions are less valuable to me than they might be to others, so since then I've held off on contributing any larger mounts, just nominal monthly payments of 1k or so.
But some excess cash is building up in the company (approx 150k), which I need to decide whether to take as salary or contribute to a pension fund, though I'm not sure if I'm allowed to contribute that much since my company salary is only 15k.

In this scenario, would a large pension fund contribution make more sense, since I will face additional taxation if I take out as salary. Or perhaps a combination of the two?
 
Is this key post of any use?

Key Post - Should I leave profits in the company and pay Corporation Tax?

The big mistake a lot of company owners make is the very simple statement "Corporation Tax is 12.5% while total taxes on income are 50%, so I will leave the profits in the company and pay less tax." The problem with this is that they will have to pay tax on the profits when they extract them...
www.askaboutmoney.com
I think that there are several others dealing with this issue.
 
@ClubMan 50k per annum tax exempt (artist) each

@barrabus as per your comment in your makeover thread, "we may be trying to be too tax efficient/not seeing wood from the trees....". This may indeed be the case.
Taking more in taxable salary would enable you contribute more to a pension depending on age.
What does your accountant say about this?
 
I also avail of the artist exemption but it's given to individuals not companies. So how are you accruing profits in a company where you have artists exemption?
 
flyingfolly said:
I also avail of the artist exemption but it's given to individuals not companies. So how are you accruing profits in a company where you have artists exemption?
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Yes, the exempt income applies individually and is completely separate from the company; it just means that we don't need to pay ourselves much from any company profits.
 
I find this hard to get my head around.

But I think that it's fairly simple - ignore the artists' income. it's tax exempt and is a completely separate "business" from the company.

So the question is "We have a limited company which makes profits - how much should we take out every year and how should we take it out?"

You talk about cash in the company. The question is not cash, but profits. Do you leave the profits in the company subject to Corporation Tax at 12.5% or take it out as pension or as income?

I think that you should take out enough each year as salary to use up your 20% tax credits.
The company should put the balance of the profits into a pension fund.
So you pay no tax at the marginal rate.

Alternatively...
Let's say the profits before directors' remuneration and pensions are €50k.
Take out €30k as salaries to use up your tax credits.
The company should then put €20k into the pension fund.

But the bottom line is that you should never be leaving profits in the company and paying Corporation Tax on them. Whether you take it out as salary and pay 20% or put it into a pension, is less important.

If your accounting year end is 31 December, you can accrue salary in the accounts but you must pay it within 6 months of the year-end. So if you left profits in the company last year, then pay them out as salary before the end of this month. Talk to your accountant before you do anything as we are working with incomplete information. Your accountant will have the full picture.
 
barrabus said:
it just means that we don't need to pay ourselves much from any company profits.
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This might be where you are going wrong. The fact that you don't need to pay yourselves much, does not mean that you should not take out those profits. You absolutely should take out those profits every year.
 
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