Originally posted by luciddreamerfrench
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Previously on "Umbrella->Limited : Getting nearly everything in dividends"
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Originally posted by blakeyuk View PostCould be my dodgy maths/tax knowledge again:
I thought I could take home £35000-ish as the limit before hitting higher rate tax.
Apparently that limited is £41000-ish.
Meaning I can take home £6K more than I thought.
Ergo, £500 a month?
(I should caveat this: I start contracting next week, so my discussions with my accountant have been somewhat theoretical at the moment).
Brett - I knew about extended the band, but my brain frazzled at the various computations, so I'll leave that to my accountant.
Andy
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If you provide your accountant with all details about your earnings, discuss the salary options they should be able to outline the most efficient way forward. They should also be able to advise you of any likely tax you may need to save.
I hope all goes well.
Brett
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Originally posted by jamesbrown View PostNot sure where the £500 comes from, but your allowance is relevant
I thought I could take home £35000-ish as the limit before hitting higher rate tax.
Apparently that limited is £41000-ish.
Meaning I can take home £6K more than I thought.
Ergo, £500 a month?
(I should caveat this: I start contracting next week, so my discussions with my accountant have been somewhat theoretical at the moment).
Brett - I knew about extended the band, but my brain frazzled at the various computations, so I'll leave that to my accountant.
Andy
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Also note that the basic rate band is extended for the gross value of any personal pension contributions or gift aid payments made and hence will allow you to take a slightly higher dividend.
BrettLast edited by Brett at Nixon Williams; 7 August 2013, 12:18.
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Originally posted by blakeyuk View PostI'm such a doofus sometimes. I'd misunderstood what your personall allowance was for.
Which is great, as means an extra £500 a month take-home for me :-)
(I think).
Cheers guys,
Andy
Anyway, just remember to use gross income amounts when comparing to the tax thresholds. This includes grossing up any net dividends paid (/.9 as indicated by Brett @ NW). Naturally, your accountant will help with all this.
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I'm such a doofus sometimes. I'd misunderstood what your personall allowance was for.
Which is great, as means an extra £500 a month take-home for me :-)
(I think).
Cheers guys,
Andy
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Originally posted by blakeyuk View PostHi Brett,
I've seen the £41,450 figure in a couple of places (eg, Tax facts | A short guide to tax rates and allowances), but I thought it was £32,010 (see https://www.gov.uk/income-tax-rates)
Where does the £41,450 figure come from?
Andy
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Originally posted by blakeyuk View PostHi Brett,
I've seen the £41,450 figure in a couple of places (eg, Tax facts | A short guide to tax rates and allowances), but I thought it was £32,010 (see https://www.gov.uk/income-tax-rates)
Where does the £41,450 figure come from?
Andy
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Originally posted by Brett at Nixon Williams View Post... the higher rate threshold for 2013/14 (£41,450 gross) as these would be free of further tax....
Brett
I've seen the £41,450 figure in a couple of places (eg, Tax facts | A short guide to tax rates and allowances), but I thought it was £32,010 (see https://www.gov.uk/income-tax-rates)
Where does the £41,450 figure come from?
Andy
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To further the point mentioned regarding dividends if you have basic rate band remaining, it would make sense to declare and take dividends (profit allowing) to take you up to the higher rate threshold for 2013/14 (£41,450 gross) as these would be free of further tax.
Taking the assumption that you have had gross earnings of £12,000 in 2013/14 thus far, then this would leave £29,450 gross band available. The dividend that could be paid free of tax would be 90% of this, i.e. £26,505.
As it has been mentioned above, the accountant you appoint should be able to advise on this having looked at your personal situation.
I hope this helps.
Brett
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Originally posted by luciddreamerfrench View PostHi everybody,
I have been contracting for 5 months through an umbrella company and am now thinking of creating my limited company.
Given that :
my contract falls outside IR35
I am not interested in pension for the moment
Ive already earned a salary which is around the 10 12k braket that "most" accountant would suggest to extract as salary when I was working under my umbrella cie.
Could I potentially pay myself only in dividends when operating through my future Ltd company until year end (next April)? Or should I still pay myself with low salary (amount to be confirmed)?
I guess this is no definite answer to that question and this will have to be analyzed by my future accountant, but I wanted to have you guys point of view on the issue
Thanks!
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Originally posted by NCOTBAC View PostI thought we had some threads about moving from perm to contract mid year which is pretty similar is it not? From what I remember the advice was not to pay any more wages and stick to divis the rest of the year.
Found this which also throws in comments about already being in higher tax bracket which might apply.
http://forums.contractoruk.com/accou...scal-year.html
What does this mean? You mean if you were working under your LTD? You don't need an accountant for a brolly and have little choice what you are paid?
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I thought we had some threads about moving from perm to contract mid year which is pretty similar is it not? From what I remember the advice was not to pay any more wages and stick to divis the rest of the year.
Found this which also throws in comments about already being in higher tax bracket which might apply.
http://forums.contractoruk.com/accou...scal-year.html
Ive already earned a salary which is around the 10 12k braket that "most" accountant would suggest to extract as salary when I was working under my umbrella cie.
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No, you don't need to pay yourself a salary as an officer (Director) of YourCo unless you have a formal contract of employment (in which case NMW legislation will apply). In short, you can pay only dividends if it makes sense to do so (or leave everything in the company, if you prefer), and your accountant will advise on that. The part about "my contract falls outside IR35"; make sure you've had the appropriate contract reviews and your working practices are aligned. Also, make sure you understand the concept of a warchest. Getting a good accountant is a good start
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