Your Ltd. company - SCENARIO 1 ways to optimize tax on payout dividends through ISA?

[Itoma]

Hi All.

How are we doing?

A bit of a niche subject but it is interesting because might be profitable if we have some good experience in this community!


So first of all - say you've got your Limited company (which most of us have):
You are contracting in the industry and you are the director of SuperBusiness Ltd.
This of course means:

1. You've got registered business.
2. You've got your company bank account where the money comes in and goes.
3. You've got VAT (mostly).
4. You are liable to Corporate Tax.
5. You pay yourself a salary through basic rate and rest through dividends.

SCENARIO 1:
Say you've got an ISA Shares account with one of the companies like H-L.
In 2018/19 there is an ISA limit of £20k.

Example salary:
I get say £100k a year from contracting.
This gives £81k after Corporate Tax of 19%.
Then I pay myself £11k tax free as basic salary.
And I'm left with round £70k of dividends.
As we know - this year tax free dividends went down from £5k to £2k so - to the case guys before we get "emotional":

What can be done to optimise tax-free dividends through use of Shares ISA please?
Of course - "you can make your Ltd. company into a public one" is a bit out of scope but can dividends from Ltd. (not public) companies be paid into ISA by eg. holding our Ltd. company shares in it to get them tax free to £20k and if yes - how?





Oh those forums... preemptively:

• No answers - "go to your accountant please". If you haven't done any of those and are not interested then just skip to the next post. The value here is in the community based on the experience of the users. Then we can all go to our accountants after doing a bit of homework first.
• If you've done it - let's share our experiences and build something good here so people will know possibilities on how to make their contracting lives this bit easier.

Thanks,
Eric

[MrButton]

Your Ltd. company - SCENARIO 1 ways to optimize tax on payout dividends throu...

Example salary:
I get say £100k a year from contracting.
This gives £81k after Corporate Tax of 19%.
Then I pay myself £11k tax free as basic salary.
And I'm left with round £70k of dividends.
As we know - this year tax free dividends went down from £5k to £2k so - to the case guys before we get "emotional":

Eh?

Salary is paid before Corp tax

[northernladuk]

We have community based experience. A quick search will prove it. Try it. Very useful.

https://forums.contractoruk.com/showthread.php?t=77595

[fullyautomatix]

why don't you just pay the tax that you are legally obliged to pay?? All this tax dodging schemes will just result in future heart ache. Under limited company method, you still pay lesser tax than a PAYE anyway. Isn't that enough already??