Taxes

There are different types of taxes that you must pay both as an employee and as a employer (thus the term self-employed). For rates and limits go HERE.

* INCOME x 1,2 means INCOME + VAT(20%)
* MAX (0; SOMETHING) means that if something is less than zero then you don't it that at all.
* /12 should speak for itself. However if your LTD is less than one year old the first year is truncated to align with the fiscal year. 

For example if you created your LTD in January you have all the allowances distributed over a period of three months instead of 12.

1 LTD Taxes
1.1 Corporation Tax << This is 20% of what remains in your company after you paid all the salaries, expenses and other taxes (this includes the accountant's fee as well). CT is also paid for the VAT gain from the flat tax scheme.

CT = ( INCOME x 1,2 - SALARY - EXPENSES - TAXES ) x 0,2

1.2 VAT(to pay) << Assuming you have the flat tax rate this is what you have to pay back to HMRC every quarter. It is less than the amount you receive but still is not 13.5% is rather ~17% (instead of 20%). VAT is recalculated over the whole amount (GROSS+VAT) out of which you only give back the 13.5% (or 14,5% after first LTD year) in the flat tax scheme.

VAT(to pay) = (INCOME x 1,2 ) x 0,135

2 Salary Taxes
2.1 Employer NI1 (13,8%) and Employee NI2 (12%) << Yes, you guessed it. You pay NI twice for yourself as self-employed. You do not pay NI for a gross salary of £671 or less and you pay them only for the difference between £671 and your own salary.

NI1 = MAX (0; (SALARY - 671) x 0,138)

NI2 = MAX (0; (SALARY - 671) x 0,12)

2.2 Income Tax << This is 20% of the SALARY (GROSS value). Income Tax is applied after the personal allowance is exhausted and only for the remainder of the sum.

PAYE(/month) = MAX (0; (SALARY - (PA / 12)) x 0,2)

If the PA is bigger than the salary then the difference goes to dividend tax relief.

3 Personal Taxes
3.3.1 Dividend TAX << The new TH!NG in 2016. 7,5% for basic rate and 32,5% for higher rate. Fortunately they come with a Dividend Allowance and a higher basic rate limit. 

DT (/month) = ( MAX (DIVIDENDS; BASIC RATE / 12) - (DIV ALOWANCE / 12) - (REMAINING PA / 12)) * 0,075

HIGHER DT = ( BASIC RATE / 12 - DIVIDENDS )  * 0,325

You only pay DT yearly so keep track on your dividends. You can claim more than the basic rate per month as long as the entire value does not exceed the basic rate limit.

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