Originally posted by Lance
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Reply to: Extra Tax Money
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Previously on "Extra Tax Money"
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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
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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?
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.
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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?
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?
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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.
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Originally posted by zonkkk View PostI 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.
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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.
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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.
So take the dividends. And pay the tax bill.
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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.
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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.
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.
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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!
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.
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Originally posted by northernladuk View PostI'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?
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!
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