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Previously on "Withdrawal of funds - this tax year or next?"
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Any you'll most likely have to make a huge payment on account for the tax the year after that....
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Originally posted by JPL View PostNext tax year, I'm planning on only withdrawing £18,000 from the company (plus the £20,000 if its worthwhile). I will also have approx £15,000 in income from property.
and take 10K this year and take the high rate hit, rather than next year with high rate + plus dividend tax
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A pension contribution would also extend your basic rate band reducing the amount of tax payable at the higher rate, if applicable.
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I think in general terms you're better to take money in your basic rate band next year, than in higher rate this year.
If, however, you're going to need to go into higher rate next year (or even at any point in the next few years), then you're better off to take that money in higher rate this year.
You need to factor potential loss of child benefit into your calculations if that's relevant to you.
IANAA.
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IMO you should sit down with your accountant and discuss it until you both come up with the same answer. Between you you should be able to work out where it's not making sense. It's not complex do I'd be very worried if your accountant can't get this right and explain it in detail so there's no argument.ot confusion.Last edited by northernladuk; 6 March 2016, 01:05.
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Withdrawal of funds - this tax year or next?
Hello,
I have posed this question to my accountant; however, I've done some sums myself, and I'm getting different results - so I thought I'd put my question on here.
I'm a limited company contractor. This tax year, I've withdrawn the max I can to keep me under the higher rate threshold: £10,600 + £31,785 = £42,385. (as advised by my accountant). There's a balance in the business savings account, of which I'll be needing £20,000 in June this year.
My question is: should I withdraw the £20,000 this tax year or next?
Next tax year, I'm planning on only withdrawing £18,000 from the company (plus the £20,000 if its worthwhile). I will also have approx £15,000 in income from property. My 16/17 calculations:
Non Dividend Income: £26,000.00
Dividend Income: £7,000.00
NDI less PA £15,000.00 (@ basic rate, £3,000.00 income tax)
Dividend Income in BR: £7,000.00 (@ basic rate £150.00 dividend tax)
So, if my sums are correct, I can withdraw an additional £10,000 next year to take me to the higher rate threshold. Therefore, if I withdraw £10,000 this year, and £10,000 next year, i'd pay ((£10,000*7.5%)+(£10,000*25%)=£3,250). Am I right?
Thanks in advance for you helpLast edited by JPL; 6 March 2016, 00:52.Tags: None
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