Reply to: Going over personal allowance - divi's

[Billy Pilgrim]

Surprisingly, that is usually the case. It is the company's liability and it is only in very rare circumstances that the debt can be transferred to the individual.

Well I never

Always thought it was a personal tax -- right -- off down the High street to put a smile on the faces of the estate agents and car salesmen

[malvolio]

That is very interesting to know. I had always assumed you'd be automatically forced to remortgage the house or whatever to pay it.

Well not really - the company and you are two separate legal entities. Provided your assets are properly in your name, the company has no right to them.

There is a supplemantal question though: the directors of a company have a liablility for its finances. So while you might not be able to pay the bill, you might also not be allowed to be a director any more.

[GreenerGrass]

Surprisingly, that is usually the case. It is the company's liability and it is only in very rare circumstances that the debt can be transferred to the individual.

That is very interesting to know. I had always assumed you'd be automatically forced to remortgage the house or whatever to pay it.

[THEPUMA]

And then be forced to sell the brand new shiny car for half the price and attempt to re-mortgage your new (negative equity) house to meet the PAYE bill?

Is it really such a good idea???

I dont think that if you havent got it in the company then you wont be asked to pay it!!!

Surprisingly, that is usually the case. It is the company's liability and it is only in very rare circumstances that the debt can be transferred to the individual.

[Billy Pilgrim]

What happens if you get a PAYE review and you lose.? All that moolah will be deemed salary. Hector will claim his pound of flesh.

Spend it.

And then be forced to sell the brand new shiny car for half the price and attempt to re-mortgage your new (negative equity) house to meet the PAYE bill?

Is it really such a good idea???

I dont think that if you havent got it in the company then you wont be asked to pay it!!!

[ASB]

Anyway,if worried about IR35, put loads in pension then take 25% tax free at 50 and further tax free amounts each year? (don't know how much and if it is yearly actually)

goes up to 55 next year though.

[ASB]

Taxed another 25% on top of what you have previously paid, so a nasty 45% or so.

Yes, and no.

To make it simple start with 100 quid of profit in a company and all your allowance are used elsewhere.

The company retains 79 quid after CT. You pay tax of 19.75 and retain 59.25. So its 40.75& overall (i.e. tax = 21% + (100 -21) * 25%).

Of course it's not so clever when the company is paying the 28% rate.

[Olly]

What happens if you get a PAYE review and you lose.? All that moolah will be deemed salary. Hector will claim his pound of flesh.

Spend it.

I never understood that (or rather I've not researched it) why wouldn't they retrospectively apply PAYE rules to what you've already taken from the company?

Anyway,if worried about IR35, put loads in pension then take 25% tax free at 50 and further tax free amounts each year? (don't know how much and if it is yearly actually)

[Jubber]

What happens if you get a PAYE review and you lose.? All that moolah will be deemed salary. Hector will claim his pound of flesh.

Spend it.

[youngguy]

You only pay the higher tax on that portion which takes you over the threshold.

I know, hence why I said "Now I know I can take up to £38kish without attracting any more tax, and anything above that will mean I get taxed 25%"

If you want the 'extra' money from your co, stop whinging and take it out and pay the bit extra tax.

I don't recall whinging, merely asking people's views!

Is it so hard to figure out what do do over a couple of thousand quid!?

Hard...no, but I like to be thorough and get views, is that not the purpose of this forum?!

You really live up to your name don't you!

[VectraMan]

Another reason to leave it in the company is you may well find yourself out of work in the next financial year. You'd be stupid to pay a load of tax on dividends this year, then find next year you earn so little you don't even reach the threshold. That's tax you needn't have paid.

[Gonzo]

Another question: I was below the high-rate tax payer band last year ( under 38ish K , with 10 K in salary rest in dividends ) ... and apprently in this case I don't pay any tax on the dividends .... how come ?

Because yourCo has already paid corporation tax on the money so the dividends are received by you with a 10% tax credit. This satisfies the tax due for a basic rate tax payer, but not a higher rate tax payer.

[Likely]

Another question: I was below the high-rate tax payer band last year ( under 38ish K , with 10 K in salary rest in dividends ) ... and apprently in this case I don't pay any tax on the dividends .... how come ?

[BolshieBastard]

You only pay the higher tax on that portion which takes you over the threshold.

If you want the 'extra' money from your co, stop whinging and take it out and pay the bit extra tax.

If you dont need it, leave it in and potentially pay more tax in future if the regulations or tax rates change.

Is it so hard to figure out what do do over a couple of thousand quid!?

[Olly]

don't take it out

Why pay extra tax unless you need the money? Use remaining company funds when you retire.
6% crikey I need to do some shifting of cash. My Euro account with Cater Allen earns a tiny amount of interest. Need to shift to GBP and find a better rate!