Half year employee/remaining half contracting

[comcontractor]

Hi,

Thanks for the replies. My accountant is away. This is the reason.

Why I am asking this is a long story. My question refer to the current tax year. I would not be postponing to the next year. If you could answer the following:

1. Given 33k salary, how would dividends be taxed? Can I still draw 32.1k of dividends without paying any tax on it? Or I can only draw 9k, without paying the taxes.

It would be great if you could let me know how would dividends be taxed (with thresholds) in my situation. What would be the most tax efficient way?

Thanks.

[northernladuk]

33k for 6 months (april to now) - presumably around 66k annual

Very good point well made. Thanks.

[stek]

I feel this may be another teeth-pulling thread...

[ceebeepps]

Why has no one asked him what his accountant says?

i was just about to

[ceebeepps]

It would be great if you could let me know how would dividends be taxed (with thresholds) in my situation. What would be the most tax efficient way?

Thanks.

your entire income in the tax year contributes to your personal limit. This was me in my first year. Speak to your accountant for best tax efficient advise, or if you dont have one, you can pay me to share the information i paid my accountant for

[WordIsBond]

Sounds like OP was an employee, employer wants to move him into contracting, and have promised to make sure he gets the same take home pay. Something like that.

OP, if that's the story, you need more than just the same take home pay. Benefits, pension contributions, etc.

If you'll be contracting with your former employer, unless a lot of things change (which they probably won't change), you'll probably be under IR35. So your tax has to be figured based on that.

IR35 status is vital to this question. So are a lot of other things.

No way anyone can really give you a meaningful answer without a lot more detail than you've given.

[stek]

Sounds like OP was an employee, employer wants to move him into contracting, and have promised to make sure he gets the same take home pay. Something like that.

OP, if that's the story, you need more than just the same take home pay. Benefits, pension contributions, etc.

If you'll be contracting with your former employer, unless a lot of things change (which they probably won't change), you'll probably be under IR35. So your tax has to be figured based on that.

IR35 status is vital to this question. So are a lot of other things.

No way anyone can really give you a meaningful answer without a lot more detail than you've given.

Yeah, sounds spot on.

£66k pa is around £4k a mo or so net monthly?

If IR35 caught I'd suggest OP looks at a yearly contact of three times, so around £180k for ease or workings? 90k 6 months, 45k for 3.

15k a month, sounds about right? Expenses of £300 a month not going to be relevant if caught or not-caught really given the amount.

I've probably got this wrong too as I am being particularly thick today (so what's new...)....

[JB3000]

Hi,

I have an employee of a multination company. I have been made redundant from them now. My salary from this employment has been 33,000 GBP for 2015/2016.

I am about to start contracting via a limited company. I would be its sole director. I would be working from home. I am negotiating my new contract. The terms of negotiation should be such that I should be getting 5000 GBP per month after taxes.

Assume that I can claim expenses of 300 GBP per month. How much should my limited company be paid each month to achieve this if the contactor duration is 3 months and if the contract duration is 6 months?

Thanks.

£400/day should do it

Assuming you work 120 days until end of March that will give you £48k

Minus £2k of expenses gives you £46k of profit

Minus £9k for corp tax gives you £37k for divi's

When you take the £37k of divi's you lose about £7k in income tax so left with £30k

£30k over 6 months is £5k/month

[comcontractor]

Thanks. This is what I was looking for :-)

£400/day should do it

Assuming you work 120 days until end of March that will give you £48k

Minus £2k of expenses gives you £46k of profit

Minus £9k for corp tax gives you £37k for divi's

When you take the £37k of divi's you lose about £7k in income tax so left with £30k

£30k over 6 months is £5k/month

[fidot]

Assuming you work 120 days until end of March

big assumption

plus you need to factor in sick pay, holiday pay, insurances, pension etc