Ever not taken your full dividend allowance?

[Murder1]

Ready to be laughed off the face of the earth, but has anyone ever not taken their full dividend allowance (up to the higher tax rate) even if sufficient funds exist in the business?

[Clare@InTouch]

In my experience a few people do, but it's usually because they haven't been aware and their records aren't up to date enough to provide advice.

[Murder1]

In my experience a few people do, but it's usually because they haven't been aware and their records aren't up to date enough to provide advice.

I'm trying to jump between the director chair and the employee chair and see if there's any business benefit in the money remaining where it is - investment / property / buffer to pay sub contractors etc

[Martin at NixonWilliams]

In my experience a few people do, but it's usually because they haven't been aware and their records aren't up to date enough to provide advice.

^^ This is often the case with us.

The few clients who do not provide us with their invoices etc effectively waste the allowance as we are unable to prepare profit statements to demonstrate that the profit is there, which is a must in order to declare dividends.

[DirtyDog]

Ready to be laughed off the face of the earth, but has anyone ever not taken their full dividend allowance (up to the higher tax rate) even if sufficient funds exist in the business?

I normally have a few £k left, just in case I've buggered something up that would push me over.

Still managed to bugger up last year

[Murder1]

I normally have a few £k left, just in case I've buggered something up that would push me over.

Still managed to bugger up last year

I've always done that. Between myself and the account we're forever rounding down so as to not go over any limit.

[Clare@InTouch]

I'm trying to jump between the director chair and the employee chair and see if there's any business benefit in the money remaining where it is - investment / property / buffer to pay sub contractors etc

If you take a basic rate dividend then it's effectively tax free, so you'd have to compare the benefits of investing through the company or investing personally.

For example say you could withdraw enough in basic rate dividends over the course of a few years to buy a house outright. Or you could leave the money in the company and buy the house through the company instead. Which is better? It depends. If it's your only house and you intend to live in it then you're better off buying personally as there would be no tax on sale and having it through the company would be a benefit in kind. If it's an investment property then maybe you want it in the company as CT on sale is 20% vs CGT personally which could be 28%. It's something you'd have to think through and plan ahead for.

[Murder1]

If you take a basic rate dividend then it's effectively tax free, so you'd have to compare the benefits of investing through the company or investing personally.

For example say you could withdraw enough in basic rate dividends over the course of a few years to buy a house outright. Or you could leave the money in the company and buy the house through the company instead. Which is better? It depends. If it's your only house and you intend to live in it then you're better off buying personally as there would be no tax on sale and having it through the company would be a benefit in kind. If it's an investment property then maybe you want it in the company as CT on sale is 20% vs CGT personally which could be 28%. It's something you'd have to think through and plan ahead for.

Much appreciate Clare, duly noted.

[philip@wellwoodhoyle]

There can sometimes be consequences for taking out the maximum amount, in terms of leaving your company balance sheet looking light. We've had a few cases where the company has been credit checked for a mobile phone or utility contract and been rejected because the net reserves have fallen from previous years or where they're very low. Given that the Co House balance sheets shows no details of profits nor dividends, it gives the impression of a loss making company, hence a lower credit rating. It's certainly something we throw into the mix when discussing dividends with clients just so that they're aware of a potential pitfall if they were thinking of entering into credit/contracts etc.

[Lloyd1981]

Whichever way....I decided to take the full amount of dividends last year....only to realise a few weeks ago that my Self Assessment payment was through the roof.

Gotta love being over the higher-rate tax threshold (Spew).....

Personally I'd leave it in the Business account for the Warchest and anytime on the bench!