Just checking dividend calc

[Olly]

Hi,
Just wanted to double check my dividend calculation. The aim of the game is to stay just under the 40% threshold.

Income is:
6000 salary (before paye deducted)
1955 personal bank interest (tax deducted at source, would be 1995*1.25 = 2443.75 pre tax)
My (ex) accountants added £156 to my CT600 for "office facilities" - do you think this might be taxed as BIK? Would it be at basic rate and so just included like any other income?

So higher rate tax kicks in at 37400 and we've got 6000+2444+156 = 8600 already received to think about.

Does this mean I can only take a dividend of 28880? Which I'd declare as 32000 dividend - 10% tax credit?

Thanks

[Sockpuppet]

No. Its £37,400 + £6470 before you hit higher rate (based on tax code of 647L).

[Craig@Clarity]

Hi,
Just wanted to double check my dividend calculation. The aim of the game is to stay just under the 40% threshold.

Income is:
6000 salary (before paye deducted)
1955 personal bank interest (tax deducted at source, would be 1995*1.25 = 2443.75 pre tax)
My (ex) accountants added £156 to my CT600 for "office facilities" - do you think this might be taxed as BIK? Would it be at basic rate and so just included like any other income?

So higher rate tax kicks in at 37400 and we've got 6000+2444+156 = 8600 already received to think about.

Does this mean I can only take a dividend of 28880? Which I'd declare as 32000 dividend - 10% tax credit?

Thanks

The "office facilities" is likely to be a use of home provision and therefore should be no BIK issues.

Gross income for you is £6,000 salary + Gross bank interest £2,494 (£1,995 / 0.8) = £8,494
Higher rate threshold is £6,475 + £37400 = £43,875

Gross income allowable before HR is £43,875 - £8,494 = £35,381

£35,381 equates to a net dividend amount of £31,842.90 (£35,381 less 10%)

[Waldorf]

1955 personal bank interest (tax deducted at source, would be 1995*1.25 = 2443.75 pre tax)

The only point I would make - is your net interest £1955 OR £1995 ?

Make sure you know when you do the calculation.

[Olly]

big hug Craig
thanking you

[Olly]

Just a thought, to minimise tax (but keeping NI contributions covered) should I lower my salary to the NI threshold of £5,075?
Ah....in a round about way we're only talk 1% difference aren't we.
21% corp tax vs 20% tax on bank interest. hmmmmmm...

[Lumiere]

NI threshold of £5,075?

£5,715 ?

[jpb2001]

Download a dividend planner from SJD website - it'll do the calculations for you:
Free bookkeeping software - Accountants UK - SJD Accountancy

[Nixon Williams]

£5,715 ?

You can give yourself a rise frim the new tax year (2011/12) to £7072 - this is the new NIC threshold for employer's NIC.

Note - the employees threshold will increase to £7225 but if you pay this, the company will be liable for NIC, I would suggest this is not worth the extra hassle to having to make a payment to HMRC each quarter.

Alan

[Lumiere]

Note - the employees threshold will increase to £7225 but if you pay this, the company will be liable for NIC, I would suggest this is not worth the extra hassle to having to make a payment to HMRC each quarter.

Alan

Hmm. Computer says no ?