Tax Query

Hi - first post so take it easy on me!!

Back in June I started up my own consultancy business, and in doing so injected £1000 capital from my own savings in order to assist with general cash flow in the early stages. The business is now doing well, and I would like to withdraw that £1000 from the business to put back into my savings. Would I have to pay income tax on the £1000 if I were to withdraw it?

Any advice would be much appreciated.

Thanks

Rob

 

No, you won't be taxed on the repayment of the £1,000 as it's not income.

If you're a sole trader, you're only liable to income tax on the profits of the business. Taking money from the business is ignored for tax purposes - the £1,000 repayment will be shown as drawings.

If you trade through a company, then the repayment will be a director's loan repayment.

 

Thank you for your help