I currently have around £220K in my company and have already taken salary and dividends up to the higher rate tax limit. I'm mulling over whether I should take out a large additional dividend to bring my annual income up to £100K and take the 25% hit because:
1. If I take it out in later years at basic rate I will pay 7.5% (and if I end up taking it out via ER I will pay 10%) so it's actually only costing me 17.5%. Plus there is a risk that the 7.5% will increase in the future.
2. With interest rates currently low having a mortgage isn't costing me much but if/when interest rates rise having the cash outside the company to pay off the mortgage becomes more attractive and I could get a better return on the cash outside the company anyway.
3. I don't have much in the way of personal savings outside the company (apart from in ISAs that I don't want to touch) and I might need to draw money out over the higher rate tax limit in future years, which would obviously cost me more than if I took it out now.
On the other hand it would be an annoying amount of tax to have to pay and future circumstances might be such that I can just keep on taking out £40K a year! Anyone else have any thoughts on this?
1. If I take it out in later years at basic rate I will pay 7.5% (and if I end up taking it out via ER I will pay 10%) so it's actually only costing me 17.5%. Plus there is a risk that the 7.5% will increase in the future.
2. With interest rates currently low having a mortgage isn't costing me much but if/when interest rates rise having the cash outside the company to pay off the mortgage becomes more attractive and I could get a better return on the cash outside the company anyway.
3. I don't have much in the way of personal savings outside the company (apart from in ISAs that I don't want to touch) and I might need to draw money out over the higher rate tax limit in future years, which would obviously cost me more than if I took it out now.
On the other hand it would be an annoying amount of tax to have to pay and future circumstances might be such that I can just keep on taking out £40K a year! Anyone else have any thoughts on this?
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