Taking a large dividend efficiently

[56samba]

Assuming you have a mortgage, have you looked into possibly extending the amount of the loan? As long as it allows overpayments and/or the repayment charges aren't prohibitive, you could repay the extra through dividends over several years in a way that might reduce your higher rate tax exposure, especially if you perhaps have a partner who's an equal shareholder but with a lower non-dividend income than you.

I did the above a good few years ago, I essentially opened a couple of cash advance credit cards back when money was almost free 0% plus a tiny % fee (about 8 years ago) When the interest free period of 2 years was up, used my mortgage to pay them off, and stuck the remaining 20k balance on that at 1%. its a lot of kicking the can down the road, and I'll probably pay it off completely when my 1.7% mortgage comes to the end of its term in 2024 and I end up on a higher rate. At the time it seemed worth it to avoid losing the personal allowance etc, and ending up in stupid rate tax.
You wont now get the free money tree credit cards, but you may still be on a decent mortgage rate to smooth out the transition.

[eek]

You wont now get the free money tree credit cards, but you may still be on a decent mortgage rate to smooth out the transition.

Um, I just moved £20,000ish (in the last 3 weeks or so) on to some 0% interest balance transfers. 1 was for 24 months and the other 30 months.

[NowPermOutsideUK]

One honest legal way is move to switzerland for five years and take all the dividends tax free!! Or close the company and pay the 10% rate

[BeesKnees]

One honest legal way is move to switzerland for five years and take all the dividends tax free!! Or close the company and pay the 10% rate

If you close the company, I think you need to go permie for two years. That would cost me way more than the tax.

Not sure what's the scheme with Switzerland, but it's my least favorite European country. Besides, the house I'm renovating is residential property and I'm doing it exactly with the aim of actually living there.

[BeesKnees]

Assuming you have a mortgage, have you looked into possibly extending the amount of the loan? As long as it allows overpayments and/or the repayment charges aren't prohibitive, you could repay the extra through dividends over several years in a way that might reduce your higher rate tax exposure, especially if you perhaps have a partner who's an equal shareholder but with a lower non-dividend income than you.

My mortgage is fixed for 5 years. Wouldn't I need to exit early and remortgage at the current prohibitive interest rates in order to do so?

[56samba]

My mortgage is fixed for 5 years. Wouldn't I need to exit early and remortgage at the current prohibitive interest rates in order to do so?

Additional secured borrowing, its listed on my mortgage account as a separate item, but at the same rate. You can try asking them.

[mgrover]

To the people mentioning a DL.

I mean it's a loan you'd have to pay back anyways no? With your own money? So you'd have to take money out the company to pay it back right? Or am I missing something?

Or is the entire objective just to move into the new financial year without crossing the threshold and then it's fine after? If so a interest free credit card seems more appropriate?

Or am I missing something here?

[BeesKnees]

To the people mentioning a DL.

I mean it's a loan you'd have to pay back anyways no? With your own money? So you'd have to take money out the company to pay it back right? Or am I missing something?

Or is the entire objective just to move into the new financial year without crossing the threshold and then it's fine after? If so a interest free credit card seems more appropriate?

Or am I missing something here?

If there is no better way, moving into a new year (and possibly the one after it) to "flatten the curve" sounds good enough. Whoever mentioned interest-free credit cards - thank you. I did now know this was a thing.

[56samba]

If there is no better way, moving into a new year (and possibly the one after it) to "flatten the curve" sounds good enough. Whoever mentioned interest-free credit cards - thank you. I did now know this was a thing.

watch out for the 'fee' % and the term. obvs a 24 month term halves the effective fee. Interestingly I first asked my mortgage Co if I could get additional borrowing for 'tax planning' reasons, they refused, so I asked them what if I'd run up 20 grand of credit card debt? "oh thats fine we'll lend you it then" it seems crazy that they would lend me 20k if I was terrible with money, but not if I was prudent. I went and got the 20k cash advance on credit cards and after a couple of years put it on the mortgage.

[mgrover]

If there is no better way, moving into a new year (and possibly the one after it) to "flatten the curve" sounds good enough. Whoever mentioned interest-free credit cards - thank you. I did now know this was a thing.

just make sure you have enough for the monthly minimum repayments since you still have to make those.