Dividend tax - things I didnt realise

[TheCyclingProgrammer]

Well, technically it doesn't impact company profits at all if you pay more dividends this year than last. But it does impact how much profit is retained in the company, which I know is what you meant. Just that somebody reading might think it affects Corporation Tax due on profits, and it doesn't, we're talking about after-tax profits here, so I decided to be pedantic.

That is what I meant, and fair enough.

[TheCyclingProgrammer]

now you take £35k net dividends before you hit the 32.5% higher rate tax - BUT now you pay 7.5% on £27k of the dividends.

Shouldn't that be on £30k?

[DallasDad]

Well thanks PC, no I hadn't realised I could effectively use my unused personal allowance in this way and I assume same could apply to swmbo as well. I am still living off last years redundancy money so had not even discussed dividends with my accountant-ette.

I have split myco shares 60/40 with my PA (swmbo) but I am not paying her a salary yet for the limited admin she is doing. I better get that corrected so we can both benefit in the most efficient way from this.

[northernladuk]

Do people not get a tax planner from their accounts showing all this?

[SueEllen]

Do people not get a tax planner from their accounts showing all this?

Nope.

[northernladuk]

Nope.

Oh.

[SueEllen]

Oh.

To be fair I can ask for one but since the dividend tax was announced kind people on here have produced lots of figures.

[WordIsBond]

To be fair I can ask for one but since the dividend tax was announced kind people on here have produced lots of figures.

Cool. How do you tell whose figures are right, and which ones are the fevered imagination of lunatics?

[Maslins]

Shouldn't that be on £30k?

Think the calc was based on £8k salary, £11k personal allowance. So you get not only £5k worth of dividends tax free due to the dividend allowance, but also £3k worth of dividends tax free due to spare personal allowance. Hence only £27k of £35k divis taxable.

[LondonManc]

Cool. How do you tell whose figures are right, and which ones are the fevered imagination of lunatics?

It's on here, ergo lunatics

Do keep up.