Dividends beyond £5k taxed wef 2016!!

[PerfectStorm]

A daft question, but where are the break points for 7.5, 32.5 and 38.1% dividend tax?

[AtW]

You forget the 10,600, 11,000 and 12,500 personal allowances for various years, and the lift of the higher rate from 42385 to 43000 up to 50,000 eventually
Can't wait for someone to do some real calculations on this.

Not everybody get those personal allowances. Fooking tories did not even have the decency to fix that

Full text of budget - https://www.gov.uk/government/upload...Accessible.pdf

[Contractoid]

Could be worse, if you can keep your combined divi and salary payments below the Higher rate (£42,385 atm) threshold then yes you will pay more, but it's not catastrophic. 7.5% rather than 32.5%.

What it will lead to is more income shifting with partners taking divi's up to the limit as well as this will still be the best way to minimise tax due.

NI allowance is going up to £3000 as well, so there may be some room for mitigation based on that.

If you are in high rate threshold it works out at £2,400 extra income tax than you were paying under the old system. Not brilliant but could definitely be worse!

[tractor]

....

If you are in high rate threshold it works out at £2,400 extra income tax than you were paying under the old system. Not brilliant but could will definitely be worse once the concept is accepted as mainstream when they can vary the rates any time they want to!

FTFY

It seems HMRC have their wish, after years of banging on about PSCs, everyone including the accountants, journos and even contractors have accepted the definition and classification of PSC without any legality and can now legislate without touching close companies legislation and peeing off the other SME and family businesses.

It's time it went to court.

[AtW]

FFS, tax credit should have been the exact amount of corp tax the company paid (plus NICs plus income tax generated from employment), ffs, I blame dirty tax dodgers and their schemes for this removal of dividend tax credit.

[surfcalavera]

Even on the higher rate, 32.5% + 20% corporation tax is 52.5%,

it is actually 46%, and if we considere 5K taxfree - just below 44%

[d000hg]

Contractors all need to increase their rates slightly.

[SpontaneousOrder]

Even on the higher rate, 32.5% + 20% corporation tax is 52.5%, still less than 40% + 13.5% company NI ...
Wow a 1% risk premium for running your own business ...generous ... lol...

I wonder if this will apply to partnerships, LLC's etc ... Also will be interesting to see what our esteemed professional cover organisation IPSE has to say. Nice work you total

32.5% of 80%. But still, not great.

[FarmerPalmer]

Even on the higher rate, 32.5% + 20% corporation tax is 52.5%, still less than 40% + 13.5% company NI ...
Wow a 1% risk premium for running your own business ...generous ... lol...

I wonder if this will apply to partnerships, LLC's etc ... Also will be interesting to see what our esteemed professional cover organisation IPSE has to say. Nice work you total

It is 32.5% on dividend, i.e. the 80% left after paying 20% CT, so is actually 40% DT + 20% CT = 60%

[SimonMac]

A daft question, but where are the break points for 7.5, 32.5 and 38.1% dividend tax?

It will folow the personal tax bands so

£0 - £5000 = 0%
£5000 - £43000 = 7.5%
£43,000 - £150,000 = 32.5%
£150,000+ = 38.1%