Take more money out of my company

**Craig@Clarity** · 4 December 2010, 17:01

You have a couple of options:

1. Declare it as a dividend and incur the higher rate tax at 25% OR
2. Take it out as a directors loan which could have BIK issues and other tax issues to consider.

The question is how much are you looking to take and what is it for? Is it short term? Do you have the means to pay it back if it is treated as a loan. Your accountant should be able to advise on the implications but will probably need to know the answers above to give you rounded advice.

**kellycell** · 4 December 2010, 17:21

Well I really think that my accountant is sh%t, cause they said to wait till Apr'11!!!
I would need about 5K.
thank you

**Craig@Clarity** · 4 December 2010, 17:29

If you currently don't have an overdrawn director's loan account in your company, you can take the £5k as a director's loan and not have any BIK issues. Then in the new tax year, you can declare a dividend to your loan account providing there is sufficient profits in the company, since your personal income is reset to zero after 5 April 11. Alternatively, you can borrow the £5k from your company and pay this back. Remember if you do this, you have 9 months after the company's year end to repay it, otherwise the company will need to pay 25% s419/s455 tax.

If your director's loan account is overdrawn by more than £5k at any point in time, there will be BIK issues to consider.

**Olly** · 4 December 2010, 18:14

Does sound like you need to give your accountants a shake. Care to name and shame?
Are you taking interest on your private bank account(s) and any other income into consideration when working out your max possible dividend?

**kellycell** · 4 December 2010, 18:30

Originally posted by Olly View Post

Does sound like you need to give your accountants a shake. Care to name and shame?
Are you taking interest on your private bank account(s) and any other income into consideration when working out your max possible dividend?

Hmm i will ask how my accountant calculates the 28K.
I think when I leave -which I think I will, cause there were too many errors - I might name and shame.

**Craig@Clarity** · 4 December 2010, 18:55

Originally posted by kellycell View Post

Hmm i will ask how my accountant calculates the 28K.
I think when I leave -which I think I will, cause there were too many errors - I might name and shame.

The £28k maximum dividend relates to keeping you below the higher rate threshold and assuming you don't have any other income other than salary and dividends from your company. The calculation is as follows:

Higher rate threshold in this tax year £43,875
Less Gross salary £12,000

Gross income before HR tax £31,875

Gross dividend of £31,875 equates to a net dividend of £28,687 rounding down to £28k.

When you pay a dividend from the company to yourself, it is a net dividend. For self assessment tax purposes, you have to gross it up by adding the 10% tax credit back on.

**Olly** · 4 December 2010, 19:45

Originally posted by Craig@InTouch View Post

The £28k maximum dividend relates to keeping you below the higher rate threshold and assuming you don't have any other income other than salary and dividends from your company. The calculation is as follows:

Higher rate threshold in this tax year £43,875
Less Gross salary £12,000

Gross income before HR tax £31,875

Gross dividend of £31,875 equates to a net dividend of £28,687 rounding down to £28k.

When you pay a dividend from the company to yourself, it is a net dividend. For self assessment tax purposes, you have to gross it up by adding the 10% tax credit back on.

Just in case it's needed....
I "think" that means you can earn up 687 interest etc before any tax was deducted (it will probably be shown after tax on your statements) and not have to pay any extra tax.

Take more money out of my company