Dividend Calculator. Help please!!!!

[Goodmans]

Hello Tax Experts,

According to the below calculation by http://calculator.contractoruk.com/. Can I take £25,900 as dividend?

But my accountant told me to take only £20,000, which is £6,000 less.

Please advise me.

I am withdrawing 12000 gross salary.

Income Information

* Salary = £12,000
* Net dividend = £25,900
* Other income = £0
* Tax code = 603L
* Tax year = Fiscal Year 2008/2009.

Dividend Information

* The gross dividend is £28,777, making your total gross income £40,777.
* You are NOT a higher rate tax payer. No extra tax is payable.


Regards,
G

[BolshieBastard]

Marvellous!

Pay for an accountant to give advice...................and ignore it while asking on a bulletin board!

Why not ask your accountant why he's suggesting 20k less. It may be for your corporation tax etc.

[thunderlizard]

umm...it's all very well telling us your tax code. But without telling us how much profit your company made in the year in question, we can't put pencil to paper.



The other question to ask your accountant is: if he says £20000 is £6000 less than £25900, please will he give the extra £100 back?

[chris79]

It's probably because £20k will attract a tax credit for the purpose of higher rate tax calculation.. so it looks something like £20,000 + (£20,000/9 = £2,222) = £22,222 on your self assessment. I can see your calculation of £26k still keeps you under the higher rate...

Then again, I might be completely wrong! I'm not an accountant.

Best ask him how he has come to this figure, and why paying more is a problem.

[pmeswani]

Hello Tax Experts,

According to the below calculation by http://calculator.contractoruk.com/. Can I take £25,900 as dividend?

But my accountant told me to take only £20,000, which is £6,000 less.

Please advise me.

I am withdrawing 12000 gross salary.

Income Information

* Salary = £12,000
* Net dividend = £25,900
* Other income = £0
* Tax code = 603L
* Tax year = Fiscal Year 2008/2009.

Dividend Information

* The gross dividend is £28,777, making your total gross income £40,777.
* You are NOT a higher rate tax payer. No extra tax is payable.


Regards,
G

My first question would be... why are you taking out £12k in salary as it would attract 20% tax? I would suggest taking £6k in salary and move the other 6k into dividends. That way you will reduce your tax burden. But speak to your accountant first and get their advice...

[ASB]

You can take as dividend the amount of NET profit you have, though it's generally considered wise to leave a bit in the company.. Since you give absolutely no information to ascertain what the net profit actually is it's a bit difficult to have any real idea.

Since you yourself clearly don't have too much idea of why you are receiving this advice from you accountants it might be a good idea to ask them.

[pmeswani]

Since you yourself clearly don't have too much idea of why you are receiving this advice from you accountants it might be a good idea to ask them.

The art of due dilligence is sweet. .

I guess the reason why the accountant is telling the OP to take less in dividends could be 2 fold.

1. Reduce the monthly tax burden on the individual.

2. Leave enough money in the business bank account to survive on if the OP is on the bench for a few months.

There could be other reasons why the accountant has made the recommendations. Unfortunately I am not a Psychic and therefore don't know the true intentions of the advice given. However... saying all this... if you are not happy with your accountant..... Then sack them and employ some other accountant who will give you the answer you want.