Do you need to take £4k/month dividend? If not and it's early in your tax year you could take out your normal whole-year dividend amount now in one lump, and then try not to take any more out of the company than you absolutely have to for the rest of the year.
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House Deposit (Dividends, directors loan?)
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Originally posted by MaryPoppinsI'd still not breastfeed a naziOriginally posted by vetranUrine is quite nourishing -
Cash in banks is not necessarily the same as what can legitimately be take as a dividend.
Liabilities such as CT and VAT etc should be considered too of course.
It may well be there is 45k of distributable reserve, but it is entirely possible there isn't too.Comment
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Originally posted by TheCyclingProgrammer View PostTaking a director's loan isn't an impossibility but there are numerous implications of taking a sizeable director's loan. In short, you can only take up to £10k without incurring a BIK or needing to charge interest - above that, you'd either have to pay interest at the HMRC specified rate or you'll incur a BIK tax charge. Additionally, any outstanding loans not repaid within 9 months after your company year end will result in a Corporation Tax charge of 25% of the outstanding loan amount. This will be repaid, but not until 9 months after the company year in which the loan is repaid.
If you want to go down the loan route you need to have a serious chat with your accountant about it but I think they'll try and discourage you and so would I.
Building up retained profit in the company as a war chest is great and if you can afford to take a chunk of this out as a dividend for a house deposit and still leave a reasonable war chest + reserves to cover all your liabilities, then good for you. You should do this and take the tax hit. You have to take the tax hit eventually. Just remember that when you fill out your self-assessment, it will probably ask you to make payments on account for the following year. If the large dividend is a one-off and you don't expect to pay higher rate tax the following year, then you might want to file a request to reduce the payments on account to nil.
Seems as if dividends are the way to go. Definitely helped me formulate some questions to ask my accountant later.
Thanks all!Comment
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