Max Dividend Question

[BrandNewCUKUser]

You have an accountant but want a second opinion from unqualified people on here?

Why not tell you're accountant you want one of his partners to confirm his calculations instead?

I don't see anything wrong with checking the figures against the collective wisdom on this board. Saying that there are also a few accountants here who contribute occasionally so I wouldn't say everyone's unqualified..

Someone might also stumble across the answer when searching for info and find it useful too. While the new 50% tax rate gets all the headlines actually the loss of personal allowance is probably more relevant for the average IT contractor and in my experience it's not widely understood.

[escapeUK]

This should ensure that people who benefit from increased spending are always even balanced with those who have to pay for it, when it comes to elections.

Hmmmm, personally I would say "no representation without taxation." Why should those who make no financial contribution to society help decide how others contribution be spent?

I agree with your flat tax idea though. Really it should never have gone above 10%-15% to spend on essentials, now when you consider Income tax, Ni, Vat and all the other hidden taxes people probably pay 50-60%, and for what??? Sigh..

Oh and to the original poster, I would ask why your accountant why you are taking £12k salary. This is not the tax efficient way, and means you will be paying two lots of NI.

[IR35 Avoider]

I can't believe the pettyness of taking away the personal allowance from people earning more than 100K.

In fact it's the "bodginess" of it that really annoys me.

I say have one personal allowance they everyone gets, set at such a level that precisely 50% of people are net tax-payers, and have a single rate of tax that is whatever it needs to be to cover government spending. Both personal allowance and rate of tax to be determined at arms-length from government by the ONS.

This should ensure that people who benefit from increased spending are always even balanced with those who have to pay for it, when it comes to elections.

[pmeswani]

Sorry but if you believe that, you need to change your accountant! In fact seeing as you say he's on his own, I would.

My accountant is in a practice which was one criteria I looked for.

WHS

[BolshieBastard]

Sometimes unqualified people with practical experience has more knowledge than qualified accountants...My accountant is 1 man army so no partner I am afraid. Thanks..;-)

Sorry but if you believe that, you need to change your accountant! In fact seeing as you say he's on his own, I would.

My accountant is in a practice which was one criteria I looked for.

[decentguy]

You have an accountant but want a second opinion from unqualified people on here?

Why not tell you're accountant you want one of his partners to confirm his calculations instead?

Sometimes unqualified people with practical experience has more knowledge than qualified accountants...My accountant is 1 man army so no partner I am afraid. Thanks..;-)

[decentguy]

No. You've forgotton a) your salary, and b) the 10% tax credit.

The maximum dividend is ~£34K, assuming no salary, so your wife gets ~£34K and you get £34K-£12K = ~£22K. Add the two together and you get ~£55K.

Makes a bit more sense now...Thanks

[BolshieBastard]

Hi,

I just wanted to check the figures that I had from my accountant about the maximum amount of dividends I could take out of my limited company without hitting the 100K limit where I'd start to lose my personal allowance.

I pay myself a minimum wage salary (of 12K) and have a standard personal allowance of £6,475. My accountant tells me I can take 28K in dividends and stay out of the higher rate tax bracket. I can take a further £51,200 (£79,200 in total) which will take me up to the 100K limit. Has anyone else (or any of the accountants) done the same calculations? Do those figures sound about right?

Thanks,

BrandNewCUKUser

You have an accountant but want a second opinion from unqualified people on here?

Why not tell you're accountant you want one of his partners to confirm his calculations instead?

[VectraMan]

Is my Maths correct?

No. You've forgotton a) your salary, and b) the 10% tax credit.

The maximum dividend is ~£34K, assuming no salary, so your wife gets ~£34K and you get £34K-£12K = ~£22K. Add the two together and you get ~£55K.

[decentguy]

My Calculations

During one of my meetings with my accountant mentioned that:
Myself and my wife (50% shareholder) can take combined dividends of £55,200 per year. On the top of this, I pay myself £12k Salary per year.

Although my accountant is good most of the time, I personally think that I am paying myself and my wife less dividends and all extra income (after paying salary and divident) is sitting in company's bank account earning mere and rubbish 0.1% interest.

If personal limit for taking dividend is £37k per person, Surely I should pay myself and my wife £37k x2 = £74k in total in dividends as opposed to what I am paying right now (as mentioend above, 55k)

Is my Maths correct? I absolutely hate it when money sits in company bank account with least interest.

[BrandNewCUKUser]

OK thanks, that makes sense.

[VectraMan]

£100K - £12K = £88K * .9 = £79,200.

Remember that dividends have a 10% tax credit, which is why you can't take £88K.

[BrandNewCUKUser]

I don't earn enough to have to worry about 50%. It's the income limit here: HM Revenue & Customs: Personal Allowance that I'm trying to avoid (with extra pension contributions). It means you're lumped with an effective marginal tax rate of 62% on income between 100K and 112K..

[malvolio]

Hi,

I just wanted to check the figures that I had from my accountant about the maximum amount of dividends I could take out of my limited company without hitting the 100K limit where I'd start to lose my personal allowance.

I pay myself a minimum wage salary (of 12K) and have a standard personal allowance of £6,475. My accountant tells me I can take 28K in dividends and stay out of the higher rate tax bracket. I can take a further £51,200 (£79,200 in total) which will take me up to the 100K limit. Has anyone else (or any of the accountants) done the same calculations? Do those figures sound about right?

Thanks,

BrandNewCUKUser

I dunno. Minimum wage is £10k pa, near as damnit. Higher rate starts at £47k, 50% band starts at £150k. Dividend income is effectively tax free up to that £47k. So I'm sorry but I don't understand your numbers. Have you thought about asking an accountant? Oh, you have, haven't you...

But yes, they are in the ball park.

[BrandNewCUKUser]

Hi,

I just wanted to check the figures that I had from my accountant about the maximum amount of dividends I could take out of my limited company without hitting the 100K limit where I'd start to lose my personal allowance.

I pay myself a minimum wage salary (of 12K) and have a standard personal allowance of £6,475. My accountant tells me I can take 28K in dividends and stay out of the higher rate tax bracket. I can take a further £51,200 (£79,200 in total) which will take me up to the 100K limit. Has anyone else (or any of the accountants) done the same calculations? Do those figures sound about right?

Thanks,

BrandNewCUKUser