Dividend/salary

[LHM]

Hi
My first contract is likely to start around mid August. Through my permanent employment I have already exceeded the 10k tax free earnings bracket. My accountant has suggested I either take a small salary and pay tax/ni (they would run a monthly payroll) and take the rest in dividends, or, just take dividends. if I drawdown as dividends, Would it mean I could take the full amount within the basic tax band up to next April, or is this pro rata, meaning I would need to somehow calculate the allowable dividend over say, 7 months (to April 2016)?
Thanks in advance

[malvolio]

The obvious answer is to ask your accountant - that's what you pay them for after all - but it all depends on what you have earned this year and what PAYE and NICs you have already accumulated. So an unanswerable question at the moment.

Also the whole dividend thing changes from next year (as I'm sure your accountant knows and if he doesn't sack him and find one who does) so you don't need a long term solution, just one for this tax year.

[Archangel]

Hi
My first contract is likely to start around mid August. Through my permanent employment I have already exceeded the 10k tax free earnings bracket. My accountant has suggested I either take a small salary and pay tax/ni (they would run a monthly payroll) and take the rest in dividends, or, just take dividends. if I drawdown as dividends, Would it mean I could take the full amount within the basic tax band up to next April, or is this pro rata, meaning I would need to somehow calculate the allowable dividend over say, 7 months (to April 2016)?
Thanks in advance

It's not pro rata, it's per tax year. You could take the whole divi on the 5th April if you wish.

[Andy O]

Same thing happened to me a couple of years ago. My accountant said to not bother taking any more salary so I just paid myself monthly dividends until the end is the tax year. You can take the full allowance, it's not pro rata. So I didn't pay any more tax that year

[LHM]

Great, thanks all..

[WordIsBond]

So I didn't pay any more tax that year

Except for corporation tax.

That's part of why we're getting hit with a big dividend tax increase, because people viewed the current system as "not paying tax," when actually it was not paying double taxation.

And if we keep talking about dividend tax as the only tax being paid, we're going to get hit with more tax increases.