Dividends / Salary. Permie halfway through tax yr.

[VectraMan]

Bear in mind that even if you don't intend to take a wage this year you'll still need to register for PAYE and run payroll (i.e. send nil acknowledgements).

Why?

2010-2011 (to April 2011) was £37400 and £6475 tax free allowance.
So ignoring the 150k+ super tax you pay 40% from £43875.

2011-2012 (to April 2012) is £35000 and £7475 tax free allowance.
and in the current fiscal year you pay 40% after £42475.

WHS. Sorry I meant to say "please don't take my word for it on the numbers".

[Scrag Meister]

£37K + your £7.6K or so allowance.

So roughly it's £37.4K+£7.6K = £45K - whatever you've earned under PAYE before tax (i.e. salary and bonus) = the amount you can earn without going into the upper rate.

However there's a bit of nastiness for dividends in that they have a 10% tax credit. Which means you need to divide the above by 1.1 to get the true figure. Thankyou Gordon.

2010-2011 (to April 2011) was £37400 and £6475 tax free allowance.
So ignoring the 150k+ super tax you pay 40% from £43875.

2011-2012 (to April 2012) is £35000 and £7475 tax free allowance.
and in the current fiscal year you pay 40% after £42475.

[psychocandy]

Bear in mind that even if you don't intend to take a wage this year you'll still need to register for PAYE and run payroll (i.e. send nil acknowledgements).

Are you sure thats true?

[Sockpuppet]

Bear in mind that even if you don't intend to take a wage this year you'll still need to register for PAYE and run payroll (i.e. send nil acknowledgements).

[VectraMan]

Before July 2011 I was a permie. I therefore obviously accumulated towards my earnings limit for this tax year threshold which from reading on the HMRC website seems to be 37,400 for 2010-2011.

£37K + your £7.6K or so allowance.

So roughly it's £37.4K+£7.6K = £45K - whatever you've earned under PAYE before tax (i.e. salary and bonus) = the amount you can earn without going into the upper rate.

However there's a bit of nastiness for dividends in that they have a 10% tax credit. Which means you need to divide the above by 1.1 to get the true figure. Thankyou Gordon.

[MiniMani]

Thanks all, you've been helpful! Will have a look on my p45 when I get it, and speak to my accountant too.

[psychocandy]

Have a word with your accountant so if you have received more than the lower earnings limit for NI they don't do a payroll for you this tax year. They will also tell you how much you can take out as dividends to ensure you don't meet the higher tax band.

The tax band limits are here -HM Revenue & Customs: Income Tax allowances

You do have an accountant don't you?

Im in a similar situation. Received PILON when I was redundant in April so thats 12K I've already been paid.

My accountant has advised me to not pay myself a salary this tax year but instead just do dividents. Obviously, I have to take into account the 12K already earned to make sure I dont exceed the upper tax threshold ideally.

[Greg@CapitalCity]

Probably zero

For the first three months while you were permanent, your dividends figure for the spreadsheet will almost certainly be zero (on the assumption you where not a shareholder of your employers company). To be sure regarding your personal tax calculation, just include the gross earnings to date figure from your P45 into the spreadsheet your accountant has provided. Don't forget to add any other sources of income too - any dividends from shares in public companies you may hold, bank interest (although usually small these days due to awfully bad interest rates on savings).

Good luck!

[MiniMani]

Have a word with your accountant so if you have received more than the lower earnings limit for NI they don't do a payroll for you this tax year. They will also tell you how much you can take out as dividends to ensure you don't meet the higher tax band.

The tax band limits are here -HM Revenue & Customs: Income Tax allowances

You do have an accountant don't you?

Thansk SueEllen, yes i do have one. He's put together a nice spreadsheet where i can enter my dividends and there is a minus figure on the side, as long as that stays minus i'm under the threshold, so I was just wondering what I should enter for the 3 previous months as my 'dividend' in that field....

[SueEllen]

Have a word with your accountant so if you have received more than the lower earnings limit for NI they don't do a payroll for you this tax year. They will also tell you how much you can take out as dividends to ensure you don't meet the higher tax band.

The tax band limits are here -HM Revenue & Customs: Income Tax allowances

You do have an accountant don't you?

[MiniMani]

Hi all,

Very basic question here...!

Before July 2011 I was a permie. I therefore obviously accumulated towards my earnings limit for this tax year threshold which from reading on the HMRC website seems to be 37,400 for 2010-2011.

I amtrying to plan my dividend outgoings for this tax year so that I stay under the threshold. I therefore assume I need to take into account what I earnt in April, May and June in my permie role? What I'm struggling to understand is what parts of the earnings do I need to take account of - which bits contribute towards what would now be my dividend, and my salary?

I also got a bonus in May, would this also be included?

Many thanks for your responses!!