Reply to: Taking a large dividend efficiently

[gazelle]

Instead of taking out extra dividends and paying tax on them, it may be more cost effective, etc, just to extend your mortgage to get the extra funds.

lol as simple as that - I missed that - I thought there was some clever way extending mortgage which can be used to reduce dividend tax - my bad

[WTFH]

Just read through this thread, a few people mentioned extending your mortgage? how does that work to reduce the dividend tax you pay?
That's confused me

Instead of taking out extra dividends and paying tax on them, it may be more cost effective, etc, just to extend your mortgage to get the extra funds.

[gazelle]

Just read through this thread, a few people mentioned extending your mortgage? how does that work to reduce the dividend tax you pay?
That's confused me

[goldengoose]

You can submit a claim to reduce your POA, on the basis that your income for this tax year was unusually large and unlikely to be the same next year - https://www.gov.uk/hmrc-internal-man...manual/sam1001

Worth being careful here , If you pay too little on your POA you get penalties/interest.

[eek]

I took out a monster 0% credit card years ago a few months pre-tax year and I'm still paying it off today. I suppose that's a good thing - I never added to the debt and it will all be paid off efficiently maximising cash flow. Don't do it too much though.

It's more - make sure you have it paid off before the 0% period runs out because there is zero guarantee that you will be able to transfer the debt onto another zero percent card.

[PerfectStorm]

I took out a monster 0% credit card years ago a few months pre-tax year and I'm still paying it off today. I suppose that's a good thing - I never added to the debt and it will all be paid off efficiently maximising cash flow. Don't do it too much though.

[mgrover]

If there is no better way, moving into a new year (and possibly the one after it) to "flatten the curve" sounds good enough. Whoever mentioned interest-free credit cards - thank you. I did now know this was a thing.

just make sure you have enough for the monthly minimum repayments since you still have to make those.

[56samba]

If there is no better way, moving into a new year (and possibly the one after it) to "flatten the curve" sounds good enough. Whoever mentioned interest-free credit cards - thank you. I did now know this was a thing.

watch out for the 'fee' % and the term. obvs a 24 month term halves the effective fee. Interestingly I first asked my mortgage Co if I could get additional borrowing for 'tax planning' reasons, they refused, so I asked them what if I'd run up 20 grand of credit card debt? "oh thats fine we'll lend you it then" it seems crazy that they would lend me 20k if I was terrible with money, but not if I was prudent. I went and got the 20k cash advance on credit cards and after a couple of years put it on the mortgage.

[BeesKnees]

To the people mentioning a DL.

I mean it's a loan you'd have to pay back anyways no? With your own money? So you'd have to take money out the company to pay it back right? Or am I missing something?

Or is the entire objective just to move into the new financial year without crossing the threshold and then it's fine after? If so a interest free credit card seems more appropriate?

Or am I missing something here?

If there is no better way, moving into a new year (and possibly the one after it) to "flatten the curve" sounds good enough. Whoever mentioned interest-free credit cards - thank you. I did now know this was a thing.

[mgrover]

To the people mentioning a DL.

I mean it's a loan you'd have to pay back anyways no? With your own money? So you'd have to take money out the company to pay it back right? Or am I missing something?

Or is the entire objective just to move into the new financial year without crossing the threshold and then it's fine after? If so a interest free credit card seems more appropriate?

Or am I missing something here?

[56samba]

My mortgage is fixed for 5 years. Wouldn't I need to exit early and remortgage at the current prohibitive interest rates in order to do so?

Additional secured borrowing, its listed on my mortgage account as a separate item, but at the same rate. You can try asking them.

[BeesKnees]

Assuming you have a mortgage, have you looked into possibly extending the amount of the loan? As long as it allows overpayments and/or the repayment charges aren't prohibitive, you could repay the extra through dividends over several years in a way that might reduce your higher rate tax exposure, especially if you perhaps have a partner who's an equal shareholder but with a lower non-dividend income than you.

My mortgage is fixed for 5 years. Wouldn't I need to exit early and remortgage at the current prohibitive interest rates in order to do so?

[BeesKnees]

One honest legal way is move to switzerland for five years and take all the dividends tax free!! Or close the company and pay the 10% rate

If you close the company, I think you need to go permie for two years. That would cost me way more than the tax.

Not sure what's the scheme with Switzerland, but it's my least favorite European country. Besides, the house I'm renovating is residential property and I'm doing it exactly with the aim of actually living there.

[NowPermOutsideUK]

One honest legal way is move to switzerland for five years and take all the dividends tax free!! Or close the company and pay the 10% rate

[eek]

You wont now get the free money tree credit cards, but you may still be on a decent mortgage rate to smooth out the transition.

Um, I just moved £20,000ish (in the last 3 weeks or so) on to some 0% interest balance transfers. 1 was for 24 months and the other 30 months.