• Visitors can check out the Forum FAQ by clicking this link. You have to register before you can post: click the REGISTER link above to proceed. To start viewing messages, select the forum that you want to visit from the selection below. View our Forum Privacy Policy.
  • FREE webinar: What does a post IR35 reform CV look like? : Mon, May 10, 2021 7:15 PM - 8:15 PM BST More details here.

Reply to: Extra Tax Money

Collapse

You are not logged in or you do not have permission to access this page. This could be due to one of several reasons:

  • You are not logged in. If you are already registered, fill in the form below to log in, or follow the "Sign Up" link to register a new account.
  • You may not have sufficient privileges to access this page. Are you trying to edit someone else's post, access administrative features or some other privileged system?
  • If you are trying to post, the administrator may have disabled your account, or it may be awaiting activation.

Previously on "Extra Tax Money"

Collapse

  • zonkkk
    replied
    Originally posted by Lance View Post

    No particular point other than you got the tax rate wrong. Again.
    And if you have to borrow money to pay your tax then you can't pay it. You are a different legal entity to your company. The fact that your company can afford to pay you a dividend is not the same as you being able to afford it.

    You != Your LTD.
    Your attention to detail is abysmal. I rest my case.

    Leave a comment:


  • kongo311
    replied
    What about a very trivial approach such as:
    a) consumer loan - 3-5% pa, which you could repay after 6 April as soon as you withdraw dividends for 2021/22, or
    b) even a cash withdrawal from any of your credit cards, which would work out as 3% initial charge + another 2% for March (based on 22% pa), or around 5% in total, which you would again repay immediately after 6 April. Even that in any case would be cheaper than paying 32.5-38.1% tax on dividends

    Leave a comment:


  • Lance
    replied
    Originally posted by zonkkk View Post

    Apparently you should get your facts straight. I can pay my tax and mortgage, thank you very much.
    Secondly, dividend tax for higher rate tax payers is 32.5% and for additional tax payers 38.1%.

    What point were you trying to make then?
    No particular point other than you got the tax rate wrong. Again.
    And if you have to borrow money to pay your tax then you can't pay it. You are a different legal entity to your company. The fact that your company can afford to pay you a dividend is not the same as you being able to afford it.

    You != Your LTD.

    Leave a comment:


  • zonkkk
    replied
    Originally posted by Lance View Post

    apparently the point wasn't taken.
    Check again.

    Is this why you can't afford to pay your tax, or a mortgage?
    Apparently you should get your facts straight. I can pay my tax and mortgage, thank you very much.
    Secondly, dividend tax for higher rate tax payers is 32.5% and for additional tax payers 38.1%.

    What point were you trying to make then?

    Leave a comment:


  • Lance
    replied
    Originally posted by zonkkk View Post
    Or 32%, point taken.
    apparently the point wasn't taken.
    Check again.

    Is this why you can't afford to pay your tax, or a mortgage?

    Leave a comment:


  • zonkkk
    replied
    Originally posted by northernladuk View Post

    I would have thought once you've attracted the attention of HMRC it won't be the first time? Better to stay off their books rather than use them for a cheap loan IMO.
    Or maybe they see you're struggling but willing to pay tax and leave you alone.

    Leave a comment:


  • zonkkk
    replied
    Originally posted by Lance View Post

    38%? You sure about that?
    Or 32%, point taken.

    Leave a comment:


  • Lance
    replied
    Originally posted by zonkkk View Post
    I don't know what the "HMRC payment plan" is but I expect that the interest would be less than the 38% you would have to pay on the dividends if you take them out and go into the higher rate tax band.
    38%? You sure about that?

    Leave a comment:


  • northernladuk
    replied
    Originally posted by zonkkk View Post
    I don't know what the "HMRC payment plan" is but I expect that the interest would be less than the 38% you would have to pay on the dividends if you take them out and go into the higher rate tax band.
    I would have thought once you've attracted the attention of HMRC it won't be the first time? Better to stay off their books rather than use them for a cheap loan IMO.

    Leave a comment:


  • zonkkk
    replied
    I don't know what the "HMRC payment plan" is but I expect that the interest would be less than the 38% you would have to pay on the dividends if you take them out and go into the higher rate tax band.

    Leave a comment:


  • Lance
    replied
    Originally posted by xenomorph View Post

    Firstly by "cash in the company" I mean cash available to withdraw for my deposit...ergo I want to avoid extra dividends that means I might struggle with withdrawing enough and have to delay the house purchase.
    Ain't no lender gonna lend you money if you can't afford to pay the tax man.
    So take the dividends. And pay the tax bill.

    Leave a comment:


  • northernladuk
    replied
    I think you need to be very careful. Maxed DL, spent tax money, so many 'unexpected' expenses. Sounds like you are living for tomorrow which in some cases never comes. Only takes one more 'unexpected' expense and you are really in the tulip up to your neck. I know you'll say I'm managing it, I know what I am doing etc but so did everyone else before the found themselves in it next deep.

    Leave a comment:


  • xenomorph
    replied
    Originally posted by Lance View Post

    cash in the company won't help with a mortgage. On what planet are you on thinking that deferring a tax bill is better than taking some money out and paying?
    If you already have a DLA you can't afford to pay back you have some serious money handling issues that will not be resolved by leaving it in the company.

    If you don't even have a mortgage to pay and cannot live on c. £50k a year (roughly equivalent to around £70k permie salary) you need to rethink what you're doing.
    Firstly by "cash in the company" I mean cash available to withdraw for my deposit...ergo I want to avoid extra dividends that means I might struggle with withdrawing enough and have to delay the house purchase.
    Secondly the DL I have was due to a emergency last year. I was perfectly fine with withdrawing enough dividends to stay in first tax bracket and going into second bracket for anything unexpected. Dont assume things.

    Leave a comment:


  • Lance
    replied
    Originally posted by xenomorph View Post

    I have outstanding DL anyway so dont want to go above £10k for BIK reasons.
    My accountant thinks I should just withdraw the amount I need plus the extra tax that I would need to pay on that withdrawal. Only downfall for this for me is it reduces the amount in my company. While I got 6 month rainy day fund for out of contract periods the rest of the cash I use to pay myself plus rest is for my deposit for house purchase so will need to see if I can just delay the purchase by month to re make the extra funds I taken out!
    cash in the company won't help with a mortgage. On what planet are you on thinking that deferring a tax bill is better than taking some money out and paying?
    If you already have a DLA you can't afford to pay back you have some serious money handling issues that will not be resolved by leaving it in the company.

    If you don't even have a mortgage to pay and cannot live on c. £50k a year (roughly equivalent to around £70k permie salary) you need to rethink what you're doing.

    Leave a comment:


  • xenomorph
    replied
    Originally posted by northernladuk View Post
    I'm assuming not but can you not pay in the DL from your own pocket just to cover the tax until the next financial year?
    I have outstanding DL anyway so dont want to go above £10k for BIK reasons.
    My accountant thinks I should just withdraw the amount I need plus the extra tax that I would need to pay on that withdrawal. Only downfall for this for me is it reduces the amount in my company. While I got 6 month rainy day fund for out of contract periods the rest of the cash I use to pay myself plus rest is for my deposit for house purchase so will need to see if I can just delay the purchase by month to re make the extra funds I taken out!

    Leave a comment:

Working...
X