Taking money from LTD... A question about calculations ...

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TibunX

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Hello to all, its my first post and I would like to greet everyone. I have a question related to taking money from my LTD for example in 2018.

If I will have 50k on my LTD account and will take all at once I understand that I will pay everything like PRSI/TAX/USC - so according to calculator it will be: 36,017 after everything (I have used this calculator: salaryaftertax - google it ). Correct?

The question is - what if Tax Office will treat it as monthly salary not yearly? I mean is it possible for Tax Office to calculate this 50k as montly salary so in this case I will get only 25,043? I am asking because I remember one time I got more due to the overtimes and extra days working and because of this PAYE system I have paid more tax. Then I had to apply for return and got some back... Wont it happen this time?


Thanks in advance!
 
TibunX

Cannot be answered here. You need some clever tax planning as it will also depend on other earnings you may have. You need to discuss with an Accountant for the best outcome.
 
You can get some general ideas here, but your accountant should advise you on tax issues.

I don't think it matters if you pay yourself €50k in one lump sum or over 12 months. There might be a small PRSI advantage in paying it monthly, but I am not sure. (Certainly there will not be a difference of €11k as you suggest).

If you pay yourself €50k on 1 January , you would pay a lot of tax, but you would get it all back by the end of the year.

I am concerned by the following:

"If I will have 50k on my LTD account"

The amount of money you have in your bank account should not be the determining factor. As a general rule, a one person company should pay and accrue enough salary by the year end to wipe out any taxable profits.



Brendan
 
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