Max Div come new tax year

[Scrag Meister]

Annual salary 12k

Max div no extra taxes, on 6th April = £27428.40?

[Craig@Clarity]

Gross divi of £29,450 or £26,505 Net

[Scrag Meister]

Oh yeah, ta.

Not sure how I got to my figure, must be some old allowance figures.

[Ketchup]

2012/2013 i was paying myself £675 a month and then took myself up to the higher threshold with a dividend.

For 2013, what is the most tax efficient way of paying yourself up to the higher tax threshold?

[Bunk]

2012/2013 i was paying myself £675 a month and then took myself up to the higher threshold with a dividend.

For 2013, what is the most tax efficient way of paying yourself up to the higher tax threshold?

Salary of £7,696, then divi for the rest, haven't worked out the exact figure yet.

Edit: That's only £641.33 a month, you were paying too much last year.

[Master]

Most efficient salary that includes NI stamp towards pension but no PAYE / NI is
£7696 / year, which I rounded down to £7692 / year or £641 / month, as I prefer whole numbers.

This leaves Gross dividend of £33758 (inclusive of Dividend tax credits) and a net dividend of £30382.20 for the year.

This is of course, assuming that there is no other income apart from the salary and dividend. (Interest / Rent / Dividends from other investments etc).

Accountants can you please validate the numbers?

[Bunk]

Most efficient salary that includes NI stamp towards pension but no PAYE / NI is
£7696 / year, which I rounded down to £7692 / year or £641 / month, as I prefer whole numbers.

This leaves Gross dividend of £33758 (inclusive of Dividend tax credits) and a net dividend of £30382.20 for the year.

This is of course, assuming that there is no other income apart from the salary and dividend. (Interest / Rent / Dividends from other investments etc).

Accountants can you please validate the numbers?

I'm not an accountant but it looks right to me. Using £7,696 as my salary I worked out that that leaves me £33,754 gross divis, or £30,378.60 net, which tallies with your figures.

It gives me a total of £38,074 this year as opposed to £38,976 last year

[Craig@Clarity]

Most efficient salary that includes NI stamp towards pension but no PAYE / NI is
£7696 / year, which I rounded down to £7692 / year or £641 / month, as I prefer whole numbers.

This leaves Gross dividend of £33758 (inclusive of Dividend tax credits) and a net dividend of £30382.20 for the year.

This is of course, assuming that there is no other income apart from the salary and dividend. (Interest / Rent / Dividends from other investments etc).

Accountants can you please validate the numbers?

I can agree your workings

[Master]

Thanks Claire.

Is there any additional risk (in terms of investigations / undue attention from HMRC) if a company pays salary and dividends such that there is no Tax / NI liability?

My accountant has just sent a note that they recommend £10000 / annum as salary (even though they recomended £7488 for the current year) and they have also included a clause in the note saying that "they cannot be held responsible for the salary structure in case of an investigation, if the clients choose £7696 as their salary".

[Clare@InTouch]

There's nothing concrete to say that a smaller salary will increase your chances of investigation, and it's perfectly legal to structure your affairs in the way that best minimises tax. Our view is that £12,000 can be seen as more commercial, but it's entirely up to you to make the final decision.

You may get a totally random investigation at some point anyway, so as long as your accounts are in order and you're happy with your IR35 status then you have nothing to worry about. Many initial enquiries from HMRC can be stopped in their tracks quickly as long as you can answer their questions promptly and adequately.