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Corporation tax and dividends

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    Corporation tax and dividends

    £10600 personal tax allowance, zero tax
    £10601 to £31785 you pay 20% corporation tax + no dividends tax=20% tax
    £31786 upwards you pay 20% corporation tax + 25% dividends tax=45% tax

    Is this correct?
    Last edited by Newbie Simon; 28 May 2015, 20:30.

    #2
    Personal allowance is 10,600 for the 2015-16 tax year.
    But you would be paying some employee NI on a potion of the salary as the NI threshold is lower.

    Looks like you are using the 2014-15 thresholds in your example.

    Comment


      #3
      Reason number 1 for getting a decent accountant.
      'CUK forum personality of 2011 - Winner - Yes really!!!!

      Comment


        #4
        Originally posted by northernladuk View Post
        Reason number 1 for getting a decent accountant.
        Is my assumptions wrong then ?

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          #5
          Your "assumptions is wrong". Someone has very kindly created a spreadsheet which can be found, on the forum, which you can use for various scenarios to maximise your allowances. I can't be arsed to do the search on your behalf.
          I was an IPSE Consultative Council Member, until the BoD abolished it. I am not an IPSE Member, since they have no longer have any relevance to me, as an IT Contractor. Read my lips...I recommend QDOS for ALL your Insurance requirements (Contact me for a referral code).

          Comment


            #6
            Originally posted by Newbie Simon View Post
            £10600 personal tax allowance, zero tax
            £10601 to £31785 you pay 20% corporation tax + no dividends tax=20% tax
            £31786 upwards you pay 20% corporation tax + 25% dividends tax=45% tax

            Is this correct?
            It isn't that simple. NICs have been ignored. Also for the top band you mention, the "25% dividends tax" as you call it is effectively 25% of the 80% left after corporation tax...so effectively ends up as 40% overall.

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