checking div calcs

[Contreras]

I was assuming that the savings would be taxed at 20%.

This is how it works out:

Gross salary:             £5,304.00       £7,072.00
Gross dividend:           £33,520.88      £31,752.88
Gross other income:       £3,650.13       £3,650.13
Total income gross:       £42,475.00      £42,475.00
                                
Tax free allowance:       £7,475.00       £7,475.00
Tax on salary:            £295.83         £649.43
Tax on dividend:          £0.00           £0.00
Tax on other income:      £730.03         £730.03
Total tax:                £1,025.85       £1,379.45
                                
Net salary:               £5,008.18       £6,422.58
Net dividend:             £30,168.79      £28,577.59
Net other income:         £2,920.10       £2,920.10
Total income net:         £38,097.06      £37,920.26
                                
Difference in net income: £176.80

Note that retained profit is reduced by the same amount, i.e. all you've managed to do is extract more income from the company without entering the higher rate band - but that was exactly the OP question I think.

Happy to be corrected if any of this is wrong.

[Olly]

I was assuming that the savings would be taxed at 20%.

This is how it works out:

Gross salary:             £5,304.00       £7,072.00
Gross dividend:           £33,520.88      £31,752.88
Gross other income:       £3,650.13       £3,650.13
Total income gross:       £42,475.00      £42,475.00
                                
Tax free allowance:       £7,475.00       £7,475.00
Tax on salary:            £295.83         £649.43
Tax on dividend:          £0.00           £0.00
Tax on other income:      £730.03         £730.03
Total tax:                £1,025.85       £1,379.45
                                
Net salary:               £5,008.18       £6,422.58
Net dividend:             £30,168.79      £28,577.59
Net other income:         £2,920.10       £2,920.10
Total income net:         £38,097.06      £37,920.26
                                
Difference in net income: £176.80

Note that retained profit is reduced by the same amount, i.e. all you've managed to do is extract more income from the company without entering the higher rate band - but that was exactly the OP question I think.

Happy to be corrected if any of this is wrong.

Would that mean paying Corporation Tax on the difference between the two salaries though meaning overall more tax to HMRC?

[Contreras]

Would that mean paying Corporation Tax on the difference between the two salaries though meaning overall more tax to HMRC?

Good question, yes more CT (£353.60 by my reckoning) but lower income tax by the same amount because both are 20%, so no difference in the overall HMRC take. The only effect is shifting the point at which you would hit the high rate band.