Higher rate dividend level for 2008/2009.

[Iron Condor]

Assuming i have no other income then at what level of dividends does the higher rate dividend tax kick in.

Is it 36K or 41K (36K+5K personal allowance).

[Sockpuppet]

£34,800

[ASB]

6035 + 34800 = 40835 of GROSS DIVIDEND * 9/10th = 10/9th = 36751 Net dividend. Obviously assumes you have no other income chargeable to UK tax whatsoever.

Assuming it is your company paying the divis you would be better off by paying a salary of 5460 (i.e. primary NI threshold, gets 0% NI and is within the tax allowances) and dividends of 40835 - 5460 * 9/10 = 31837.50. You'll save the CT on 5460 = 1146.60 this way. Of course this assumes the profits are current year, otherwise you may have to carry forward the current year loss if you don't have 5460 of profits this year.

[chrisl]

Why does my little tax booklet say £36,000 for 2008/09 to be in the higher rate tax band?

This is a chiltern tax specialists booklet.

[QwertyBerty]

Why does my little tax booklet say £36,000 for 2008/09 to be in the higher rate tax band?

This is a chiltern tax specialists booklet.

http://www.hmrc.gov.uk/employers/epa-understanding.htm

Following an announcement by the Chancellor earlier this year, the basic Personal Allowance for the 2008-09 tax year has increased by £600 from £5,435 to £6,035. And the basic rate tax band (the amount of taxable income you can earn before paying higher rate tax) has reduced from £36,000 to £34,800.

[wizard1974uk]

Why does my little tax booklet say £36,000 for 2008/09 to be in the higher rate tax band?

This is a chiltern tax specialists booklet.

Erm possibly because it is a printed booklet that doesn't reflect the changes pointed out by QwertyBerty and that was announced on the TV several times.