Reply to: Divs next year

[TheCyclingProgrammer]

Really?

Good to know. I thought it was a completely separate allowance.

It is but it applies to your dividends from the bottom up.

You'd have to have non dividend earnings above the higher rate threshold *before* taking any dividends for the reduction to result in more higher rate tax.

[MrButton]

Even if you're a higher rate tax payer you will only pay an extra £225 because the zero rate dividend band is applied to the bottom slice of your dividends.

Not really much to worry about really and this £225 increase may yet be compensated by an increase in the personal tax threshold and the higher rate threshold.

Really?

Good to know. I thought it was a completely separate allowance.

[FrontEnder]

Even a couple of grand increase would be miles better than inside IR35 or PAYE.

[northernladuk]

Last time I checked the plan was to keep increasing the personal allowance, I think it's going up to £12000 next year so that's £37.50 back.

No idea if the higher rate threshold will go up but I guess we will know in the Autumn Budget.

I shouldn't be so negative on it all but I can't help thinking, based on history, something else is going to smack us in the face to the tune of a couple of grand a year to offset this. I guess every increase to soften the blow should be welcomed.

[TheCyclingProgrammer]

Or may not

Last time I checked the plan was to keep increasing the personal allowance, I think it's going up to £12000 next year so that's £37.50 back.

No idea if the higher rate threshold will go up but I guess we will know in the Autumn Budget.

[northernladuk]

Not really much to worry about really and this £225 increase may yet be compensated by an increase in the personal tax threshold and the higher rate threshold.

Or may not

[TheCyclingProgrammer]

What does this mean in reality? An extra £225 a year assuming staying in the lower rate?

Even if you're a higher rate tax payer you will only pay an extra £225 because the zero rate dividend band is applied to the bottom slice of your dividends.

Not really much to worry about really and this £225 increase may yet be compensated by an increase in the personal tax threshold and the higher rate threshold.

[TheCyclingProgrammer]

Surely if you want to take the same as last year it means 3k more into the higher rate. So £975 more tax?

And if you take 3k less than last year £0 more tax?

No, because the reduction in the dividend tax free band does not affect the other tax thresholds.

Edit: yes to the second bit.

[SlipTheJab]

I wouldn't worry about it until after the general election next spring

[eek]

no last year £3000 in tax
this year £3000 in tax
next year £3225 in tax. The change is for the 2018/19 tax year...

[l35kee]

Well yes but I didn't want to make the assumption that other people have their wife as a shareholder

Or a secretary.

[l35kee]

Surely if you want to take the same as last year it means 3k more into the higher rate. So £975 more tax?

And if you take 3k less than last year £0 more tax?

So if last year i took £45k = £3000 tax
This year I take £45k = £3225

So if I take the same dividends I pay £225 more in tax..?

[MrButton]

My assumptions are for a contractor currently taking up to the current max within the lower rate (£45k)

[MrButton]

What does this mean in reality? An extra £225 a year assuming staying in the lower rate?

Surely if you want to take the same as last year it means 3k more into the higher rate. So £975 more tax?

And if you take 3k less than last year £0 more tax?

[eek]

Share them? Surely she's bought her own?

Well yes but I didn't want to make the assumption that other people have their wife as a shareholder