How much income tax would I pay on £60K

[malvolio]

Yes I do but what he says goes in one ear and out the other.... Maybe I should go back to being a permie

Maybe. But since he is an accountant, he should be able to give you a definitive and accurate answer (somewhere around £8k, BTW), and it's not something you will want to get wrong.

If he can't (or won't) then what are you paying him for?

[ASB]

But looking at http://www.hmrc.gov.uk/rates/it.htm isn't the first 5225 an allowance? So should have paid 10% on first 225?

So to pay is 10% on (2230-225) = 10% of 2005
plus 22% of (34,600-2230)
plus 18% of (72217-5250-34600)
= 200.50 + 7121.40 + 5836.06 = 13148

?????

No. It doesn't work like that. My assumptions:-

1) The PAYE scheme has been operated correctly. Thus the correct PAYE is paid.
2) The dividends satisfy nill rate/lower rate/basic rate. [Because this is the way it is]
3) There is no other income, either taxed, untaxed or potentially partly taxed.
4) Dividends in excess of the standard rate band (i.e. the 40,000 I was ignoring [although I think the actual figure should be 39825]) attract tax at 32.5%. Less the 10% credit already received. So, it's 25% of the net dividend received (spot the error in my estimate it should be 22.5% of 32717).

Overall effect of this is that you pay 25% of net dividends in the higher rate threshold. You don't pay anything on dividends in the lower thresholds because the tax credit is deemed to cover it. This does seem to cause a lot of confusion.

So, another way. If you pay yourself 36k (approx) of dividends and you have no other income you won't pay any income tax on it.

[BrilloPad]

HMRC have an online tax calculator you can use if you have registered. This lets you put in your dividends. And it even lets you put in the net dividends and rounds them up to the gross taxable.

But off the top of my head:

Salary 5,550
Gross divi 66,667

Total 72,217

Less 40,000 (lower rate/nil rate which is satisifed bt the PAYE).

32,217. 25% of that is due to be paid, so there is an additional 8100 to pay. If you get a number wildly different then one of us will be wrong.

But looking at http://www.hmrc.gov.uk/rates/it.htm isn't the first 5225 an allowance? So should have paid 10% on first 225?

So to pay is 10% on (2230-225) = 10% of 2005
plus 22% of (34,600-2230)
plus 18% of (72217-5250-34600)
= 200.50 + 7121.40 + 5836.06 = 13148

?????

[ASB]

Gross

so the value of dividends in the accounts is 54k then?

If so, I'm sure you can rework the estimate.

[ASB]

I pay my self Dividends every quarter which are a total of £60K. My salary is £5,550.

HMRC have an online tax calculator you can use if you have registered. This lets you put in your dividends. And it even lets you put in the net dividends and rounds them up to the gross taxable.

But off the top of my head:

Salary 5,550
Gross divi 66,667

Total 72,217

Less 40,000 (lower rate/nil rate which is satisifed bt the PAYE).

32,217. 25% of that is due to be paid, so there is an additional 8100 to pay. If you get a number wildly different then one of us will be wrong.

[roadster198]

So that is 60k per year? Net or gross?

Gross

[BrilloPad]

I pay my self Dividends every quarter which are a total of £60K. My salary is £5,550.

So that is 60k per year? Net or gross?

[roadster198]

Let me guess - you don't have an accountant...

Yes I do but what he says goes in one ear and out the other.... Maybe I should go back to being a permie

[malvolio]

Let me guess - you don't have an accountant...

[roadster198]

I pay my self Dividends every quarter which are a total of £60K. My salary is £5,550.

[MrRobin]

Is that as a salary? Is that your only income for the whole year?

If yes to both of these then yeah you can just use a simple PAYE calculator that are all over the web.

[malvolio]

can I use one of the PAYE tax calcs on the web?

I don't know, can you? They don't look too hard...

Insufficient information suuplied, I'm afraid. There's only one set of tax laws, so if you're talking about straight salary then yes. If you have some dividend payments in there, or have included expenses aas income, then it gets a little more tricky.

[roadster198]

that I'd paid myself. I have a Ltd company can I use one of the PAYE tax calcs on the web?