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If I got it, the main tax an UK Ltd has to pay is the corporate tax, which is about 20% of the total income of the company. This income include income derived from bonds, stocks, mutual funds distributions of coupons and real estate rents.

So, let's suppose my Ltd company owns $1M of Coca-cola stocks, which produces a yield of 3%, my Ltd will earn 30.000$ per year, and will pay $6000 as corporate tax, having a net income of $24.000. This will be the same also for bonds, ETF funds and so on, right?

What about operating expenses of the company, for example paying rent for its HQ, or buying equipment such as a laptop? Shouldn't that be subtracted before calculating the corporate tax?

For example: if those Coca-cola shares make my company to income a gross of $30.000, and I pay the rent of company's HQ which is $10.000 and a laptop which costs $1000, I will have a net income of 30.000 - (10.000 + 1.000) = $19.000. And then, I'll pay corporate tax on that net income of $19.000 which will be $3800. Resulting in a total net income of $15.200.

Or, these operating expense are taxed just after calculation of corporate tax?

What about if the Ltd company rents a real estate it owns? I guess that repairs and maintenance of those real estates could be paid before corporate tax, because are mostly operating expenses.

And, what about VAT? Does a Ltd company have to pay VAT on the rent income it receives?

For example, if the Ltd lets a building which produces £50.000 of gross income, if it should pay both VAT and corporate tax on that, would net only £32.000 instead of £40.000 of corporate tax only, without VAT.

  • This doesn't appear to be a personal finance question. – JohnFx Jun 18 '14 at 12:49
  • There are tags such as 'taxes' and 'corporation', and questions posted about these very topics are plenty. – Marco Pagliaricci Jun 18 '14 at 13:28
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For stocks, bonds, ETF funds and so on - Taxed only on realised gain and losses are deductible from the gain and not from company's income.

Corporate tax is calculated only after all expenses have been deducted. Not the other way around.

Real estate expenses can be deducted because of repairs and maintenance.

In general all expenses related to the operation of the business can be deducted. But you cannot use expenses as willy nilly, as you assume. You cannot deduct your subscription to Playboy as an expense. Doing it is illegal and if caught, the tours to church will increase exponentially.

VAT is only paid if you claim VAT on your invoices.

Your situation seems quite complicated. I would suggest, get an accountant pronto. There are nuances in your situation, which an accountant only can understand and help.

  • Thanks. I'll agree that there are many nuances that only an accountant can understand and give me help. But, I understand your point of willy nilly expenses. However buying a laptop, or a subscription to a website for finance researches such as morningstar.com, or paying the rent of offices and HQ doesn't seem willy nilly expenses to me, but real business expenses. Aren't they? – Marco Pagliaricci Jun 18 '14 at 13:47
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    buying a laptop- Most cases yes. subscription to a website for finance researches such as morningstar.com - Only if your business is finance related. paying the rent of offices and HQ - Only if used for business. You cannot claim the whole rent of your house as expense. Only the part really used for business. – DumbCoder Jun 18 '14 at 16:10
  • I see. I cannot deduce the rent of my house from corporate tax, but I can still pay it after having subtracted corporate tax from the gross income. So, I can pay it with the money I get after having corporate tax paid. After all, since I own the company, I can do everything I want with the after tax net income, even paying my house rent, right? – Marco Pagliaricci Jun 18 '14 at 20:53
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    I can do everything I want with the after tax net income, even paying my house rent Another wrong assumption. Remember company money isn't personal money. You have to pay yourself a dividend/salary from the company and then it becomes personal money. Company money is never personal money. – DumbCoder Jun 19 '14 at 10:12

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