Paying large divi - sticking my head over the parapet?

[Jessica@WhiteFieldTax]

IME, its unlikely to change risk profiles in its own right.

[Wanderer]

I'm thinking of paying myself a lumpsum out of my ltd's profits to fund a buy to let venture.

You could also consider closing the company and taking a capital distribution...

Sure it might flag you up to HMRC but so long as your accounts and tax affairs are straight then who cares?

[Clare@InTouch]

The last few years I've been paying myself divis up to the higher rate threshold and the rest into a pension.

It would be quite a big discrepancy on previous years, that's all I wad concerned about. Of course, it'll also mean I'll have to make payments on account which will be a pain.

You can reduce the payments on account if your income will drop in the following tax year.

It might highlight you to HMRC, but then you could get a random inspection at any time anyway. Provided you have nothing dodgy going on then it should be quite a simple enquiry anyway.

[zoco]

I don't see how. Business's have good years and bad years which affect their divi payments. As long as it is all out of profits and documented it is all above board. I think you are getting tied up over your own self imposed limit according to tax banding.

I would however pass it past your accountant in case there is anything else you can do, maybe wait and split it across company year end to lessen the hit. Maybe even split it across three years with a 1/3 divi with rest as a loan. Timed right you should be able to take the second and 3rd div over three years? Only benefit there I can see is it gives you time to tighten your belt for a few years so maybe not need as much divi as a lump sum now... if that makes sense. I am guessing here so a good accountant will help.

Yes, thanks. I'll do that - want to do this before housing market gets silly again. Year end in March so I could split it over 2 years at least....

[zoco]

The last few years I've been paying myself divis up to the higher rate threshold and the rest into a pension.

It would be quite a big discrepancy on previous years, that's all I wad concerned about. Of course, it'll also mean I'll have to make payments on account which will be a pain.

[northernladuk]

I don't see how. Business's have good years and bad years which affect their divi payments. As long as it is all out of profits and documented it is all above board. I think you are getting tied up over your own self imposed limit according to tax banding.

I would however pass it past your accountant in case there is anything else you can do, maybe wait and split it across company year end to lessen the hit. Maybe even split it across three years with a 1/3 divi with rest as a loan. Timed right you should be able to take the second and 3rd div over three years? Only benefit there I can see is it gives you time to tighten your belt for a few years so maybe not need as much divi as a lump sum now... if that makes sense. I am guessing here so a good accountant will help.

[zoco]

I'm thinking of paying myself a lumpsum out of my ltd's profits to fund a buy to let venture.

This will take me way into the higher tax bracket. Could this bring myself to the attention of HMRC as it will look highly irregular compared to previous years' accounts?