Corporation Tax/Income Tax

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Hi guys, quick question for response from the experts! Am I correct in understanding Corporation Tax is levied on ALL profits, and there's no threshold underwhich none is paid as in income tax?

In which case, where are tax savings?! Thanks

Yes, that's my understanding. Deduct salaries, expenses, anything you can think of that will come off the profit but yes, then Corp tax applies on the rest.

Oh i get it. I knew there must be something obvious I missed. Salaries can be taken off the profits, but not dividends - is that right?

yes, but for companies with profits under £300k corp tax is 20%, whereas for a unincorporated trade you will pay both income tax and national insurance.

For all rates of tax, the overall tax take is lower as a company with the owners taking dividends than it is for a sole trade / partnership.

Yes, the savings are in the Class 4 NI which companies don't pay.

I think I would say that for all levels of profit above the Class 4 NI threshold, the overall tax take is lower as a company with the owners taking a small salary and dividends than it is for a sole trade / partnership.