Salary v dividends

[smileyface]

In the new tax year starting April 2016, the personal allowance goes up to £11,000,meaning anything earned up to the amount is exempt from Income Tax.

Also from April 2016, the first £5,000 of dividends is free of any tax.

If I choose NOT to take a salary, can that £11,000 be regarded as an additional tax free dividend, ie can I take a total of £5,000 + £11,000 = £16,000 as dividends and not pay any tax on it?

[mudskipper]

In the new tax year starting April 2016, the personal allowance goes up to £11,000,meaning anything earned up to the amount is exempt from Income Tax.

Also from April 2016, the first £5,000 of dividends is free of any tax.

If I choose NOT to take a salary, can that £11,000 be regarded as an additional tax free dividend, ie can I take a total of £5,000 + £11,000 = £16,000 as dividends and not pay any tax on it?

Why would you do that?

[SueEllen]

No.


And if you don't understand why get your accountant to explain to you about business expenses and profit.

[northernladuk]

I can't believe the number of threads with basic questions like this. I guess there are going to be plenty more before April.

I just don't get why people don't speak to their accountants first or are they on here because they don't have accountants??

Oh it's in General. That's not so bad then.

[SueEllen]

I can't believe the number of threads with basic questions like this. I guess there are going to be plenty more before April.

I just don't get why people don't speak to their accountants first or are they on here because they don't have accountants??

Oh it's in General. That's not so bad then.

Remember some people simply refuse to understand their finances while others refuse to and others can't.

[AtW]

Govt is making too many changes too fast and saying publicly things that are clearly designed to mislead people, ie: 3% extra stamp duty to stop dirty BTLers (real life: will apply to everybody who got more than 1 house owned at the time of completion), or £5k tax free dividends - lovely, but not really (as I understand) if somebody earns enough - that would be still taxed.

[SueEllen]

Govt is making too many changes too fast and saying publicly things that are clearly designed to mislead people, ie: 3% extra stamp duty to stop dirty BTLers (real life: will apply to everybody who got more than 1 house owned at the time of completion), or £5k tax free dividends - lovely, but not really (as I understand) if somebody earns enough - that would be still taxed.

Nope.

The changes the government is making in terms of small businesses are easy to understand even more so if you have an accountant to help you.

[AtW]

The changes the government is making in terms of small businesses are easy to understand even more so if you have an accountant to help you.

The changes they make are indeed easy to undestand - shafting small business. The details need to be checked with an accountant, but it's going to be pretty big shafting from April.

[ContractorHardman]

In the new tax year starting April 2016, the personal allowance goes up to £11,000,meaning anything earned up to the amount is exempt from Income Tax.

Also from April 2016, the first £5,000 of dividends is free of any tax.

If I choose NOT to take a salary, can that £11,000 be regarded as an additional tax free dividend, ie can I take a total of £5,000 + £11,000 = £16,000 as dividends and not pay any tax on it?

So, let me get this straight... you dont want to pay a salary at all and just use free Dividends? You are the reason George Osborne comes after us. I'm sorry if this is harsh but deary me! I don't know what is more worrying, the logic behind the idea, the lack of knowledge behind the idea, asking the Internet for justification of the logic or the fact someone actually hires you for a lot of money per day.

Please ask your accountant. ..if you have one. If not, I seriously you hire one NOW! Plus I would also read up on IR35.

Sorry if this is harsh but you need some reality

[DannyF1966]

If I choose NOT to take a salary, can that £11,000 be regarded as an additional tax free dividend, ie can I take a total of £5,000 + £11,000 = £16,000 as dividends and not pay any tax on it?

If you think it's a good idea, then you should go for it and see what happens. You never know, you might be able to sneak it in under HMRC's radar, because as we all know, they only bother about the big fish and leave us tiddlers alone to do as we please. Keep us posted though, we could all do with a good laugh occasionally.