Originally posted by DaveB
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Reply to: With the new divi tax next fy
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Previously on "With the new divi tax next fy"
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Originally posted by WordIsBond View PostA salary of £11K makes sense if you like paying National Insurance (employer 13.8%, employee 12%) rather than corporation tax (20%).
Since employer NI reduces profit and thus corporation tax, the net rate is about 11% for employer NI, so for the band between £8K (where NI kicks in) and £11K (the start of the basic rate band), total NI tax runs about 23% and income tax is 0%, while corporation tax would be 20% and income tax / divi tax is 0%. So if you use an £11K salary as opposed to £8K, it will cost you about £90.
If you have any BIK, such as private health insurance, that can affect what is optimal.
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A salary of £11K makes sense if you like paying National Insurance (employer 13.8%, employee 12%) rather than corporation tax (20%).
Since employer NI reduces profit and thus corporation tax, the net rate is about 11% for employer NI, so for the band between £8K (where NI kicks in) and £11K (the start of the basic rate band), total NI tax runs about 23% and income tax is 0%, while corporation tax would be 20% and income tax / divi tax is 0%. So if you use an £11K salary as opposed to £8K, it will cost you about £90.
If you have any BIK, such as private health insurance, that can affect what is optimal.
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Originally posted by PerfectStorm View PostAnd the 2nd most optimal level?
What you probably mean is where the marginal rate jumps - that's going to be around the 40% tax band or thereabouts - roughly 43K, but not 100% sure due to the 5K counting towards personal allowance.
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Originally posted by PerfectStorm View PostAnd the 2nd most optimal level?
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I'm no expert but my back of a "cigarette" pack calculation is
Salary = £11,000
Dividend = £32,000 (Tax Free £5,000)
Divi tax = £2,025 (7.5% Tax)
Net = £40,975
I was going to budget myself a Dividend of £29,975 (5000+((32000-5000)*0.925) as I'll already factor in the 7.5% Divi tax at source.
Whichever way you go about it £2,025 is the most you'll pay under the old school technique of 10% divi tax if paying above £5,000 and below £32,000 in dividends.
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Yeah, optimum is about 17k As in, 11k personal allowance, plus 5k divi, plus 1k interest (tax free).
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Originally posted by DaveB View PostIf you can survive on salary + £5000 then you'll pay no tax, but this is the only way to do it.
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Originally posted by PurpleGorilla View PostHas anyone been able to work out the optimum salary/div split to maximise efficiencies? If so - what's it looking like?
Edit : If you can survive on salary + £5000 then you'll pay no tax, but this is the only way to do it.Last edited by DaveB; 14 October 2015, 12:03.
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With the new divi tax next fy
Has anyone been able to work out the optimum salary/div split to maximise efficiencies? If so - what's it looking like?Tags: None
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