Originally posted by Olly
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Reply to: checking div calcs
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Previously on "checking div calcs"
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Originally posted by Contreras View PostI was assuming that the savings would be taxed at 20%.
This is how it works out:
Code:Gross salary: £5,304.00 £7,072.00 Gross dividend: £33,520.88 £31,752.88 Gross other income: £3,650.13 £3,650.13 Total income gross: £42,475.00 £42,475.00 Tax free allowance: £7,475.00 £7,475.00 Tax on salary: £295.83 £649.43 Tax on dividend: £0.00 £0.00 Tax on other income: £730.03 £730.03 Total tax: £1,025.85 £1,379.45 Net salary: £5,008.18 £6,422.58 Net dividend: £30,168.79 £28,577.59 Net other income: £2,920.10 £2,920.10 Total income net: £38,097.06 £37,920.26 Difference in net income: £176.80
Happy to be corrected if any of this is wrong.
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I was assuming that the savings would be taxed at 20%.
This is how it works out:
Code:Gross salary: £5,304.00 £7,072.00 Gross dividend: £33,520.88 £31,752.88 Gross other income: £3,650.13 £3,650.13 Total income gross: £42,475.00 £42,475.00 Tax free allowance: £7,475.00 £7,475.00 Tax on salary: £295.83 £649.43 Tax on dividend: £0.00 £0.00 Tax on other income: £730.03 £730.03 Total tax: £1,025.85 £1,379.45 Net salary: £5,008.18 £6,422.58 Net dividend: £30,168.79 £28,577.59 Net other income: £2,920.10 £2,920.10 Total income net: £38,097.06 £37,920.26 Difference in net income: £176.80
Happy to be corrected if any of this is wrong.
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There is a 10% tax savings band that means a lower rate on interest as long as your non-savings income (ie not dividends) is below £10,035. Have a read here:
The 10% starting rate for savings income « TaxAid
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Originally posted by Olly View Posthow does that work then?
Gross interest from personal savings of £3650.13 and personal allowance of £7475 means you will pay income tax (20%) on any salary above £3824.87. Reducing the salary therefore reduces income tax although it increases corporation tax (also 20%) by an identical amount. Then, if you pay out dividends up to max allowed before higher rate income tax this results in the same total net personal income + company retained profit.
By some wizardry of accounting and the difference between tax on dividends and basic rate income (10% vs. 20%) you end up with an extra 10% of the difference (7072-5034) in pocket before being liable for higher rate income tax. Either that or my spreadsheet is lying to me.
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Alternatively, reduce salary to £5,304 and up dividends to £30,168.78 for an extra take home of £177.
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Originally posted by Olly View PostTa very much gorgeous Clare...you are gorgeous aren't you?
And you're welcome :-)
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Originally posted by Olly View PostJust used an online calculator and wanted to quickly check all's ok please:
Tax code 747L
Salary from Ltd = 7072 gross
Interest from bank savings = 3650.13 gross
Max dividend to minimise personal tax = 28580
How does that sound pls?
Deduct your salary and bank interest to get £31,752.87. Divide by 10 and x 9 to get the maximum net dividend = £28,577.58.
Anything over that amount will result in a tax bill equal to 25% of the excess, so take £29,577.58 and you can expect a tax bill in January next year of £250.
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Originally posted by Olly View PostJust used an online calculator and wanted to quickly check all's ok please:
Tax code 747L
Salary from Ltd = 7072 gross
Interest from bank savings = 3650.13 gross
Max dividend to minimise personal tax = 28580
How does that sound pls?
The tax rates have been announced for next year, so unless Osborne changes his mind they will be as follows:
2012-13 NIC Rates, 2012-13 Income Tax Rates, Personal Allowance
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Originally posted by Olly View PostJust used an online calculator and wanted to quickly check all's ok please:
Tax code 747L
Salary from Ltd = 7072 gross
Interest from bank savings = 3650.13 gross
Max dividend to minimise personal tax = 28580
How does that sound pls?
Leave a comment:
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checking div calcs
Just used an online calculator and wanted to quickly check all's ok please:
Tax code 747L
Salary from Ltd = 7072 gross
Interest from bank savings = 3650.13 gross
Max dividend to minimise personal tax = 28580
How does that sound pls?Tags: None
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