Max Div come new tax year

[jamesbrown]

Thanks

Minor point: the tool does not support the scenario where income above the VAT registration threshold is outside of the scope of VAT.

[inniAccounts]

Thanks

[Apox21]

If you want to get into the details of dividend tax planning we've got a really comprehensive (I'll be bold enough to say the most comprehensive) limited company tax calculator here: Contractor Tax Calculator - The UK's Most Powerful Contractor Calculator. It's designed to allow you to play with different scenarios and see instantly what the tax impact will be.

It's just been updated with the 2013/14 rates plus if you're inclined you can do a side-by-side comparison with 2012/13.

In this case just hit the 'Start My Calculation' button, check your turnover and vat settings, then pop in a salary of £12k on the next page. You'll soon end up with a tax profile, which looks something like this:

Pretty handy calculator that one!

[inniAccounts]

If you want to get into the details of dividend tax planning we've got a really comprehensive (I'll be bold enough to say the most comprehensive) limited company tax calculator here: http://www.contractor-tax-calculator.co.uk. It's designed to allow you to play with different scenarios and see instantly what the tax impact will be.

It's just been updated with the 2013/14 rates plus if you're inclined you can do a side-by-side comparison with 2012/13.

In this case just hit the 'Start My Calculation' button, check your turnover and vat settings, then pop in a salary of £12k on the next page. You'll soon end up with a tax profile, which looks something like this:

[Clare@InTouch]

There's nothing concrete to say that a smaller salary will increase your chances of investigation, and it's perfectly legal to structure your affairs in the way that best minimises tax. Our view is that £12,000 can be seen as more commercial, but it's entirely up to you to make the final decision.

You may get a totally random investigation at some point anyway, so as long as your accounts are in order and you're happy with your IR35 status then you have nothing to worry about. Many initial enquiries from HMRC can be stopped in their tracks quickly as long as you can answer their questions promptly and adequately.

[Master]

Thanks Claire.

Is there any additional risk (in terms of investigations / undue attention from HMRC) if a company pays salary and dividends such that there is no Tax / NI liability?

My accountant has just sent a note that they recommend £10000 / annum as salary (even though they recomended £7488 for the current year) and they have also included a clause in the note saying that "they cannot be held responsible for the salary structure in case of an investigation, if the clients choose £7696 as their salary".

[Craig@Clarity]

Most efficient salary that includes NI stamp towards pension but no PAYE / NI is
£7696 / year, which I rounded down to £7692 / year or £641 / month, as I prefer whole numbers.

This leaves Gross dividend of £33758 (inclusive of Dividend tax credits) and a net dividend of £30382.20 for the year.

This is of course, assuming that there is no other income apart from the salary and dividend. (Interest / Rent / Dividends from other investments etc).

Accountants can you please validate the numbers?

I can agree your workings

[Bunk]

Most efficient salary that includes NI stamp towards pension but no PAYE / NI is
£7696 / year, which I rounded down to £7692 / year or £641 / month, as I prefer whole numbers.

This leaves Gross dividend of £33758 (inclusive of Dividend tax credits) and a net dividend of £30382.20 for the year.

This is of course, assuming that there is no other income apart from the salary and dividend. (Interest / Rent / Dividends from other investments etc).

Accountants can you please validate the numbers?

I'm not an accountant but it looks right to me. Using £7,696 as my salary I worked out that that leaves me £33,754 gross divis, or £30,378.60 net, which tallies with your figures.

It gives me a total of £38,074 this year as opposed to £38,976 last year

[Master]

Most efficient salary that includes NI stamp towards pension but no PAYE / NI is
£7696 / year, which I rounded down to £7692 / year or £641 / month, as I prefer whole numbers.

This leaves Gross dividend of £33758 (inclusive of Dividend tax credits) and a net dividend of £30382.20 for the year.

This is of course, assuming that there is no other income apart from the salary and dividend. (Interest / Rent / Dividends from other investments etc).

Accountants can you please validate the numbers?

[Bunk]

2012/2013 i was paying myself £675 a month and then took myself up to the higher threshold with a dividend.

For 2013, what is the most tax efficient way of paying yourself up to the higher tax threshold?

Salary of £7,696, then divi for the rest, haven't worked out the exact figure yet.

Edit: That's only £641.33 a month, you were paying too much last year.

[Ketchup]

2012/2013 i was paying myself £675 a month and then took myself up to the higher threshold with a dividend.

For 2013, what is the most tax efficient way of paying yourself up to the higher tax threshold?

[Scrag Meister]

Oh yeah, ta.

Not sure how I got to my figure, must be some old allowance figures.

[Craig@Clarity]

Gross divi of £29,450 or £26,505 Net

[Scrag Meister]

Annual salary 12k

Max div no extra taxes, on 6th April = £27428.40?