uk-tax practice 1 Q31

Hi Jilly,

Joe is the managing director and 100% shareholder of OK-Joe Ltd. He has always withdrawn the entire profits of the company as director’s remuneration, but given a recent increase in profitability he wants to know whether this basis of extracting the profits is beneficial.

For the year ended 5 April 2024, OK-Joe Ltd’s taxable total profits, before taking account of director’s remuneration, are £65,000. After allowing for employer’s class 1 national insurance contributions (NIC) of £6,779, Joe’s gross director’s remuneration is £58,221.

The figure for employer’s NIC of £6,779 does not deduct the £5,000 employment allowance as, because Joe is OK-Joe Ltd’s only employee, this is not available.

My question :

1 For the gross remuneration of Joe of 58221 do we have to deduct class 1 employee NIC before tax calculation ??

2 For the corporation tax The whole profit gone to remuneration of Joe ,but as far as the corporation OK-JOE ltd
we have to calculate the corporation tax on 65000??? or on 58221 after employer class 1 NIC ???

Thanks,