Dividends beyond £5k taxed wef 2016!!

[tractor]

...

Obviously my post was written to amuse, but seems to have caught you in a bad mood.

To see the kind of wording that is appropriate, dig out one of those letters the utility companies are always sending to explain their rate increases. Then use similar language...

Exactly, then when all the insurance companies put their premiums up immediately because of the budget changes, that's ok then!

Sauce, goose and gander.

[AtW]

Exactly, then when all the insurance companies put their premiums up immediately because of the budget changes, that's ok then! Sauce, goose and gander.

That's market power for you.

[Zero Liability]

Indeed, the 2k will hurt, but I can cope with that. The possible problems with expenses do concern me and IR35 is back on the table which will seriously upset some in IPSE who'd considered it dead and had abandoned the campaign, of course it was abandoned all too early since it's likely to be back with a vengeance.

It could still be dead, but they may potentially replace it with something that doesn't require a court case in which they win to apply higher taxes. It'll probably be as simple as just applying a higher tax rate on dividends to "PSCs" where the client is forced into admitting there is some SDC (on a much less strict basis than applies for IR35), which they will probably assume is the case for most "PSCs" operating via an agency, true or not, coupled with threatening to stick the end user with the bill if they don't agree to play ball. I think it'll just be the FLC by another name, but at this point it's all guesswork and little more.

[Ltdcamel]

So let me get this right. Assuming neither of you breach the 40% limit....

At the moment, no additional tax due because its credited and covered by CT at 20%. So £5K still the same but 7.5% personal tax on anything above?

So, example, income split, 10K salary, and 30K each in dividends.

So now we'd each pay an extra 7.5% on £25K each of this? £1875 per year each. Still £3700 less per year in pocket. Not cool.

Of course, paying CT at 19% would cut this down a bit. As would the NI thing.

Not happy Mr C. Looks like hes found a way to claw some money back from us.....

Suppose cant complain we've had it good for so long.

So when does this come in?

Hmmm, well I started 6 months ago. Timing is everything

[tractor]

....

It could still be dead, but they may potentially replace it with something that doesn't require a court case in which they win to apply higher taxes. It'll probably be as simple as just applying a higher tax rate on dividends to "PSCs" where the client is forced into admitting there is some SDC (on a much less strict basis than applies for IR35), which they will probably assume is the case for most "PSCs" operating via an agency, true or not, coupled with threatening to stick the end user with the bill if they don't agree to play ball. I think it'll just be the FLC by another name, but at this point it's all guesswork and little more.

I have been banging this drum for a long time. They are just going after the pipeline knowing that clients will cave in and insist on compliance.

There is only one place to go from there, the number of contractors will shrink significantly, more and more ICTs because there is a skills shortage, far lower costs for the client.

Never mind the quality, feel the width.

WTG supporting us, Dave.

[Zero Liability]

[zappakat]

I'm giving my accountant a couple of days to read through all the gubbins (they've already sent out a general bulletin)

So as a quick question if my tax year is June to May, what tax implications will I get with regards to taking dividends during this period?

i.e Can I take the full £28,500 (quick rounding) at 0%
Will I be caught for all of that with the £5000 0% and £23,500 @ 7.5%
Or will anything paid after April 2016 (for the last 2 months) be taxed @ 7.5%?

[mudskipper]

I;m giving my accountant a couple of days to read through all the gubbins (they've already sent out a general bulletin)

So as a quick question if my tax year is June to May, what tax implications will I get with regards to taking dividends during this period?

i.e Can I take the full £28,500 (quick rounding) at 0%
Will I be caught for all of that with the £5000 0% and £23,500 @ 7.5%
Or will anything paid after April 2016 (for the last 2 months) be taxed @ 7.5%?

Your personal tax year is 6 April - 5 April. This is what is relevant here - nothing to do with your company year end.

[zappakat]

Cheers for the reply. Maybe that's my confusion, I saw someone earlier post about the fact they'd already paid out the whole dividend premium for the year and were worried about the extra tax implications.

So what you're saying is if my company pays me my dividend before April then there is no further tax to pay?

[Burnerg81]

Hi all.

First post so good to get confirmation from any accountants on the forum but isn't anyone taking out dividends to the 20% tax limit better off now?

Eg.

In 2015/16
Salary £8052
Dividends £30899 = £34333 after 10% tax credit so you've hit the £42385 20% limit
Total take home pay = £8052 + £30899 = £38951

In 2016/17
Salary £8052
Dividends: £34648 available as no tax credits anymore which means £5k tax free and £29648 taxable at 7.5% = £27424
Total take home pay = £8052 + £5000 + £27424 = £40476

Unless I've incorrectly picked up that the tax credit is being abolished in favour of the new percentages.