Best Tax Efficient Way To Stay Under The Higher Tax Band In 2016/2017

[dagenheis]

Here's a useful quick and dirty calc, works for single directors.


2016-17 - Dividend tax increase calculator

F.

It isn't about tax calculation. 8060 (salary)+ 7940 (divi) would cost no tax. everything else is 7.5% in until you reach higher rate

I was wondering more about the set-up i.e., implications of EA, AE for Ltd with 1 director and 1 PA/CS spouse (paying CS up to 8060) after I had some useful info from couple of learned members.


Thanks anyway!

[garnet]

You might consider issuing new class of shares to your family and spouse/gf/bf.
Make them non-vote and distribute dividend to this class only, to the amount of £5000.
So each person will utilize their £5000 divi allowance.
Then they can gift you the money afterwards. Gifts are not to be declared in tax return.

[WordIsBond]

You might consider issuing new class of shares to your family and spouse/gf/bf.
Make them non-vote and distribute dividend to this class only, to the amount of £5000.
So each person will utilize their £5000 divi allowance.
Then they can gift you the money afterwards. Gifts are not to be declared in tax return.

Yes, you might consider that.

And while you are considering it, click the link on the sidebar on S660. And also consider how you will pay the back tax and the hefty penalty that comes due when HMRC finds out about this, which they probably will. You might even consider who is going to support your family if you end up doing time for tax evasion, though maybe you'll get off with just a big fine.

[garnet]

Yes, you might consider that.

And while you are considering it, click the link on the sidebar on S660. And also consider how you will pay the back tax and the hefty penalty that comes due when HMRC finds out about this, which they probably will. You might even consider who is going to support your family if you end up doing time for tax evasion, though maybe you'll get off with just a big fine.

It is not worth mentioning articles from 2011. You might prefer everyone here to be caught by HMRC and fined, but there must be a reason for that i.e. doing something illegal.

At the very best this is a grey area, who is to say your LTD can not issue and sell shares. As long as people receiving dividend from these shares pay the tax due on the dividend they can do whatever they want with the money.
Who is to say they can not gift it to me or my wife.

Specifically in this tax year no tax is avoided at all. Dividend is paid after corp tax paid. Person don't owe tax on divi because they are basic tax payer.

I agree one can be inquired by HMRC, but it is the law ultimately that governs what can and can not be done.

[northernladuk]

You might consider issuing new class of shares to your family and spouse/gf/bf.
Make them non-vote and distribute dividend to this class only, to the amount of £5000.
So each person will utilize their £5000 divi allowance.
Then they can gift you the money afterwards. Gifts are not to be declared in tax return.

Wow..... Just wow....

[dogzilla]

Arctic Systems.
an £8K salary isn't ethical, whether you can get away with it legally or not. So I actually agree with you, mostly.

If you want to get into ethical then how ethical is it to get paid £600/day to post on ContractorUK? Ethics are totally irrelevent in my opinion.

If a DJ can get paid £10k for an hour pressing play on a CD player then I don't see why it's less ethical paying your spouse £650 for 5 minutes work each month.

Nobody can make a judgement on the value of someone's work to a private individual or company, not HMRC nor any judge or politician. We have a free market and that means I can pay whatever I want to whomever I want. If HMRC ask me what my wife does I'll tell them she opens my mail and since I don't trust anyone else in the world to open my sensitive mail she is in a unique position to command a very high rate.

Just don't be stupid and ask her to pay a standing order into your bank account each month because that IS tax evasion. However if she spends the money as she see's fit, on bills, food, restaurants. Well that's her money to do what she pleases and HMRC can do one.

[northernladuk]

If you want to get into ethical then how ethical is it to get paid £600/day to post on ContractorUK? Ethics are totally irrelevent in my opinion.

That's not an ethical conundrum.. It's time management.

If a DJ can get paid £10k for an hour pressing play on a CD player then I don't see why it's less ethical paying your spouse £650 for 5 minutes work each month.

Which DJ? One of the best in their field? Awful comparison for a host of reasons so doesn't help anything.

Nobody can make a judgement on the value of someone's work to a private individual or company, not HMRC nor any judge or politician.

I am sure you will find they can.

We have a free market and that means I can pay whatever I want to whomever I want. If HMRC ask me what my wife does I'll tell them she opens my mail and since I don't trust anyone else in the world to open my sensitive mail she is in a unique position to command a very high rate.

Now when public money is involved which it is. You can tell them that and they might think you are a bit of a dick as well. Just a stupid comment that.

Just don't be stupid and ask her to pay a standing order into your bank account each month because that IS tax evasion. However if she spends the money as she see's fit, on bills, food, restaurants. Well that's her money to do what she pleases and HMRC can do one.

Are you sure about that??

I hope all that didn't take you long to write.......

[WordIsBond]

It is not worth mentioning articles from 2011. You might prefer everyone here to be caught by HMRC and fined, but there must be a reason for that i.e. doing something illegal.

At the very best this is a grey area, who is to say your LTD can not issue and sell shares. As long as people receiving dividend from these shares pay the tax due on the dividend they can do whatever they want with the money.
Who is to say they can not gift it to me or my wife.

Specifically in this tax year no tax is avoided at all. Dividend is paid after corp tax paid. Person don't owe tax on divi because they are basic tax payer.

I agree one can be inquired by HMRC, but it is the law ultimately that governs what can and can not be done.

If the law in question hasn't changed since 2011, then the articles are no more nor less useful now than they were then.

You've mis-stated here, though. I wasn't talking about tax being avoided, I was talking about tax being evaded. If you don't know the difference, stop advising other people, and educate yourself. Your LTD can certainly issue and sell shares, but if the people who receive the dividends pay less tax than you would pay, and then gift them back to you, it is illegal tax evasion. And I'll be surprised if your posting privileges continue for long if you keep pushing illegal tripe.

[WordIsBond]

If you want to get into ethical then how ethical is it to get paid £600/day to post on ContractorUK? Ethics are totally irrelevent in my opinion.

If ethics are irrelevant why are you debating it? For those who don't think ethics are irrelevant, it's something to consider.

I'm not paid by the day, I'm paid in increments of a twentieth of an hour, except when on a fixed cost contract. On a typical day I'll put in time on anywhere between 2 and 5 contracts. Time spent here, or listening to the budget, or checking the footie or cricket results, is not billed to any of them. If it were, I would quickly lose those contracts through non-performance.

[dogzilla]

That's not an ethical conundrum.. It's time management.

Exactly. It's got nothing to do with ethics. That's why I said it. To highlight the stupidity in bringing ethics into a conversation on subjective value of an individual's worth.

Which DJ? One of the best in their field? Awful comparison for a host of reasons so doesn't help anything.

You don't understand the point being made. Who decides whether a DJ is worth £10k? Is that DJ worth £10k to everyone? Or only to some people? They are only worth what someone is willing to pay them at any given time. i.e. It's entirely subjective.

I am sure you will find they can.

Oh you are sure? That settles it then. No. Try again and this time engage more than your arse before you reply. There is no law which sets an upper limit on an individual's worth when it comes to private companies paying individuals.

Now when public money is involved which it is. You can tell them that and they might think you are a bit of a dick as well. Just a stupid comment that.

Public money? We are talking about a private company paying an individual from privately earned funds.

1. It's not illegal to pay your spouse to work for you.
2. There is no upper limit for how much you can pay a spouse nor any law which specifies how much work they have to do. i.e. market rates don't come into it.

Both of these things have already been discussed in the Arctic case.

Whether the law will change in the future is irrelevent, this is the law as it stands now.