CT Rate Change

[Ivor1]

Question.

If on the 1st May you had £50k profit in your business account, 25k of this was generated by invoices paid to you before the 1st April CT increase, the second £25k after the 1st April and CT increase.

You now want to pay yourself a dividend on the 1st May, do I apply 20% CT on the full £50k as Im paying the div on 1st May, or do I apply 19% to the amount recieved before the 1st April and 20% to the amount recieved after the 1st April.

Basically is the ct rate applied based on the date of dvi payment or receipt or on date of invoice that generated that profit.

[ASB]

CT and dividends have nothing to do with each other.

In terms of which CT rates to apply to the profits since your year hasn't ended yet you don't know. HMRC assume that profits are earned equally in an accounting period so the general method is:-

(profit / 365) * days at rate * CT rate

This is then applied to the number of different rates which are chargeable in the accounting period.

http://www.hmrc.gov.uk/ctsa/mrr_worksheet.htm

[Ivor1]

Ahh ok so two rates will apply but in proportion to when they did apply

[VectraMan]

I'd assumed you just paid the same rate for the whole year, and the rate you paid was the current rate on the date of your year end.

As for divs, it's your responsibility to make sure there's enough money left to pay the CT and any other costs (even if you find yourself out of work for the rest of the year). Beyond that it doesn't really matter how much and when you pay dividends.

[PAG]

[QUOTE=VectraMan]I'd assumed you just paid the same rate for the whole year, and the rate you paid was the current rate on the date of your year end.

QUOTE]

Its pro rata