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Extra Tax Money

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    Extra Tax Money

    Hi all

    As normal I been putting away percentage of all dividend I withdrew for self assessment payment. However end of last year I had unexpected expenses so withdraw more and didn't save the tax Money aside.

    Is the easiest thing to withdraw more to cover that at higher tax bracket or to use the HMRC payment plan and pay interest in amount not paid?

    #2
    I personally would only use time to pay if I was in dire straits (money for nothin') but if I had funds I could legitimately draw down on from my company, I'd do that first.

    Just my opinion. Nothing technically wrong with either approach.

    Comment


      #3
      I'm assuming not but can you not pay in the DL from your own pocket just to cover the tax until the next financial year?
      'CUK forum personality of 2011 - Winner - Yes really!!!!

      Comment


        #4
        Originally posted by northernladuk View Post
        I'm assuming not but can you not pay in the DL from your own pocket just to cover the tax until the next financial year?
        I have outstanding DL anyway so dont want to go above £10k for BIK reasons.
        My accountant thinks I should just withdraw the amount I need plus the extra tax that I would need to pay on that withdrawal. Only downfall for this for me is it reduces the amount in my company. While I got 6 month rainy day fund for out of contract periods the rest of the cash I use to pay myself plus rest is for my deposit for house purchase so will need to see if I can just delay the purchase by month to re make the extra funds I taken out!

        Comment


          #5
          Originally posted by xenomorph View Post

          I have outstanding DL anyway so dont want to go above £10k for BIK reasons.
          My accountant thinks I should just withdraw the amount I need plus the extra tax that I would need to pay on that withdrawal. Only downfall for this for me is it reduces the amount in my company. While I got 6 month rainy day fund for out of contract periods the rest of the cash I use to pay myself plus rest is for my deposit for house purchase so will need to see if I can just delay the purchase by month to re make the extra funds I taken out!
          cash in the company won't help with a mortgage. On what planet are you on thinking that deferring a tax bill is better than taking some money out and paying?
          If you already have a DLA you can't afford to pay back you have some serious money handling issues that will not be resolved by leaving it in the company.

          If you don't even have a mortgage to pay and cannot live on c. £50k a year (roughly equivalent to around £70k permie salary) you need to rethink what you're doing.
          See You Next Tuesday

          Comment


            #6
            Originally posted by Lance View Post

            cash in the company won't help with a mortgage. On what planet are you on thinking that deferring a tax bill is better than taking some money out and paying?
            If you already have a DLA you can't afford to pay back you have some serious money handling issues that will not be resolved by leaving it in the company.

            If you don't even have a mortgage to pay and cannot live on c. £50k a year (roughly equivalent to around £70k permie salary) you need to rethink what you're doing.
            Firstly by "cash in the company" I mean cash available to withdraw for my deposit...ergo I want to avoid extra dividends that means I might struggle with withdrawing enough and have to delay the house purchase.
            Secondly the DL I have was due to a emergency last year. I was perfectly fine with withdrawing enough dividends to stay in first tax bracket and going into second bracket for anything unexpected. Dont assume things.

            Comment


              #7
              I think you need to be very careful. Maxed DL, spent tax money, so many 'unexpected' expenses. Sounds like you are living for tomorrow which in some cases never comes. Only takes one more 'unexpected' expense and you are really in the tulip up to your neck. I know you'll say I'm managing it, I know what I am doing etc but so did everyone else before the found themselves in it next deep.
              'CUK forum personality of 2011 - Winner - Yes really!!!!

              Comment


                #8
                Originally posted by xenomorph View Post

                Firstly by "cash in the company" I mean cash available to withdraw for my deposit...ergo I want to avoid extra dividends that means I might struggle with withdrawing enough and have to delay the house purchase.
                Ain't no lender gonna lend you money if you can't afford to pay the tax man.
                So take the dividends. And pay the tax bill.
                See You Next Tuesday

                Comment


                  #9
                  I don't know what the "HMRC payment plan" is but I expect that the interest would be less than the 38% you would have to pay on the dividends if you take them out and go into the higher rate tax band.

                  Comment


                    #10
                    Originally posted by zonkkk View Post
                    I don't know what the "HMRC payment plan" is but I expect that the interest would be less than the 38% you would have to pay on the dividends if you take them out and go into the higher rate tax band.
                    I would have thought once you've attracted the attention of HMRC it won't be the first time? Better to stay off their books rather than use them for a cheap loan IMO.
                    'CUK forum personality of 2011 - Winner - Yes really!!!!

                    Comment

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