# Tax efficient way to take remuneration from limited company?



## sceach (5 May 2010)

Hi 
I am a fulltime PAYE worker. I recently formed a limited company as a side business and am wondering what the most tax efficient way of taking payment/benefit from the company is?
Thanks.


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## sceach (5 May 2010)

Just to add:
I put €10,000 into the company as working capital.
Can I (hopefully) take this back from the company tax free at the end of the year?


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## d2x2 (6 May 2010)

You will pay PAYE on the income you get out of your company.

For your working capital, check with your accountant but this is likely treated as debt and therefore just a reimbursement that would not attract tax.


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## Graham_07 (6 May 2010)

The PAYE income will usually mean your tax credits and possibly all your standard rate cut-off point are used up there so any income from the company will be taxed in full and at your marginal rate. 

The capital you put in can be treated as a directors loan and repaid to you as funds allow with no implications. 

You may find pension payments useful in reducing tax on your pay form the company.


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## NHG (6 May 2010)

Do you have any travel expenses  that you can claim?


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## sceach (6 May 2010)

Thanks guys. My tax credits are all used up by my PAYE job.
These are some ideas I have:


Buy equipment out of my own money and lease it to the company e.g. van, computer, printer etc.
Claim expeses e.g. diesel, phone, lunches etc.)
Occasionally one of the employees may need to stay overnight in Dublin, can I rent a room in my house to the company?


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## Graham_07 (6 May 2010)

sceach said:


> Thanks guys. My tax credits are all used up by my PAYE job.
> These are some ideas I have:
> 
> 
> ...




If you buy assets and rent/lease them to the company then the company gets a deduction at 12.5% on the expense. However remember you are then receiving the rental/leasing income personally which is chargeable at your marginal rate of tax+PRSI+Levies which is going to be more than that. The same would apply in case of renting a room to the company. ( which I do not think is relieved under rent-a-room relief as you are renting commercial space not residential) 

Also, unless you are personally registered for VAT then you lose the potential VAT claims on the items. If the company buys/leases them then as long as it is VAT registered then it will get the VAT claims. 


Employees are entitled to Revenue approved mileage and subsistence which are covered in guides IT51 and IT 54 on Revenue's site.


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## sceach (6 May 2010)

Thanks all.
Looks like the best option is to bite the bullet, take a wage and pay the relevant taxes.


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## simplyjoe (7 May 2010)

sceach said:


> Thanks all.
> Looks like the best option is to bite the bullet, take a wage and pay the relevant taxes.


 
Not at all. You have been given good advice here.
1) Mix salary with pension payments
2) Claim expenses using civil service rates. These are generous rates and if anything people underclaim these expenses as they do not keep proper records.
3) Claim a percentage of home phone. Also ESB, oil, etc.. Percentage = area of office over total area of house.
4) If your 10k investment was by way of loan you can withdraw this without any tax.
5) If your spouse (if applicable) works in the company pay him/her a salary increasing your standard rate band. Also pay him/her expenses for expenses incurred on behalf of the company.
6) Consider purchasing a commercial vehicle if you do enough milage. Weigh up all factors in this matter.

People pay too much tax. You need to ensure that your affairs are organised so that you pay only the tax that you are legally obliged to.


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