Dividends and Taxation

[Stumped]

Hoping someone can give some clarity here.

example
Ltd Company.
Regular salary £15k
Net Dividend 1 - £10K
Net Dividend 2 - £10K
Total income so far £35K

What would be the tax due if I was to receive another 2 dividends each of £10K?

Is there any difference between interim and final dividends?

Thanks for any help
St

[Greg@CapitalCity]

So we're talking about personal tax for 2011/12? Here you go;
Higher rate earnings threshold = £42,475

Gross earnings so far = 15k + (10kx10/9) + (10kx10/9) = 37,222

Two further dividends of 10k each = additional gross earnings of £22,222;

Total gross earnings = £59,444
Personal tax to pay = (59,444 - 42,475) * 22.5% = £3,818

Edit: Assuming of course your £15k salary has been taxed correctly.

[prozak]

thank you for distracting me from playing with Sage.

Regular salary £15k
Net Dividend 1 - £10K
Net Dividend 2 - £10K
Total income so far £35K

-- Income for SA = 22222.22 + 15000 = £37,222.22 (a)

- No tax due yet. You can still pay yourself another (42475 - (a))x 0.9 = £4727.5

After that amount you owe 22.5%.

So your extra 20k in dividends will be

20000-4727.5 = £15,272.5

Add the tax credit = 16969.44
Tax at 22.5% = 3818.125

So additional tax of your proposed dividends is 3818.13 approx.

Of course I am probably wrong as I've been drinking and am tearing my hair out over software I am not familiar with...

You could always search for a dividend calculator as well.

[prozak]

So we're talking about personal tax for 2011/12? Here you go;
Higher rate earnings threshold = £42,475

Gross earnings so far = 15k + (10kx10/9) + (10kx10/9) = 37,222

Two further dividends of 10k each = additional gross earnings of £22,222;

Total gross earnings = £59,444
Personal tax to pay = (59,444 - 42,475) * 22.5% = £3,818

Edit: Assuming of course your £15k salary has been taxed correctly.

oops.. beat me too it.. and I got my percentages wrong.

[Wanderer]

Regular salary £15k

You should reduce your salary to £7068 and save about £1,700 a year in tax that you could avoid.

[Sockpuppet]

You should reduce your salary to £7068 and save about £1,700 a year in tax that you could avoid.

could

[Clare@InTouch]

Just to add an easier way to calculate it:

If you have a higher rate limit of £42,475 less your salary = £27,472 then divide by 10 x 9 = £24,727.50. Any dividends over that level will result in tax equal to 25% of what you take (which is equal to 22.5% of the gross).

For £40,000 it would be £40,000 less £24,727.50 = £15,272.50 divided by 4 = £3,818.13.

[northernladuk]

And you have an accountant?

[Waldorf]

Why not check this out, this will work it out for you - https://www.nixonwilliams.com/dividend_calculator.asp

[Danielsjdaccountancy]

Also, don't forget those dreaded payments on account!

HMRC will want half of that again on 31st Jan 12 and the other half 31st July 12, so budget for this. Unless of course you don't expect to take such a high earning in the 12/13 tax year, in which case you can reduce with an SA303 claim.