CGT on Dividends query

[kookachoo]

Morning all.

Had a spreadsheet from my accountant, advising the impact of taking a £60,000 div in my 08/09 company year.

Can't get hold of my normal rep as she is now on holiday and someone else will call me back.. I love urgency, but I need to work out my house deposit availability today!

I am confused.

They have listed income as:

Employment £6,300
UK Divs/Tax Credits £66,666

Income Tax
£34,535 @ 10% Divs rate = £3,453.50
£265 @ 20% Basic rate = £53.00
£32,131 @ 32.5% Higher Divs rate = £10,442.57

Taking off Tax Credit on Divs of £6,666.60 and £493.00 already paid at source they then add £5,472 in CGT making my total tax liability £12,261.47

I am unsure as to why I pay higher rate on the Divs and then additionally pay this CGT amount.

Can anyone help answer this, or perhaps think of another way that might be more efficient?

I am sole director, 100% shareholder.

Thanks in advance.

[THEPUMA]

Morning all.

Had a spreadsheet from my accountant, advising the impact of taking a £60,000 div in my 08/09 company year.

Can't get hold of my normal rep as she is now on holiday and someone else will call me back.. I love urgency, but I need to work out my house deposit availability today!

I am confused.

They have listed income as:

Employment £6,300
UK Divs/Tax Credits £66,666

Income Tax
£34,535 @ 10% Divs rate = £3,453.50
£265 @ 20% Basic rate = £53.00
£32,131 @ 32.5% Higher Divs rate = £10,442.57

Taking off Tax Credit on Divs of £6,666.60 and £493.00 already paid at source they then add £5,472 in CGT making my total tax liability £12,261.47

I am unsure as to why I pay higher rate on the Divs and then additionally pay this CGT amount.

Can anyone help answer this, or perhaps think of another way that might be more efficient?

I am sole director, 100% shareholder.

Thanks in advance.

The CGT is probably on something else. Did you sell a property or any shares last year. Did you wind up a company?

[kookachoo]

Thanks for your reply.

Nope, nothing like that at all... just took my pittance of a salary... I didn't think CGT was payable on Divs, or even if it was - how can I be taxed twice?!

[THEPUMA]

Thanks for your reply.

Nope, nothing like that at all... just took my pittance of a salary... I didn't think CGT was payable on Divs, or even if it was - how can I be taxed twice?!

It isn't. It is only payable on a gain made on the disposal of an asset.

[kookachoo]

You're right... they just called and said... oh don't know why that is there..

[ratewhore]

Get a new accountant.