Reply to: Dividends beyond £5k taxed wef 2016!!

[tractor]

...

Isn't £2k a year about the profit a typical contractor makes per year from the VAT FRS?

No, It's a tax saving that any small business can quite legitimately take advantage of.

Not all contractors do. I don't for one.

Serious point, I would be happy to take your 'holier than thou' comments when you post your accounts here and prove that you put your money where your mouth is i.e. pay voluntarily PAYE/Full EE and ER NI on your dividends or pay all your profit out as PAYE salary.

Until then, it's all hot air!

[AtW]

Torygraphs owners are allegedly based offshore so they will be ok...

[gizzmo]

The new dividend tax: a simple case of double taxation - Telegraph

Article in the Telegraph today. Richard Evans is asking people to email with their opinions.

[d000hg]

Isn't £2k a year about the profit a typical contractor makes per year from the VAT FRS?

[Platypus]

I've decided to jump right into this and am today taking additional dividends that will push me well in to higher rate tax

[WordIsBond]

Hi all.

First post so good to get confirmation from any accountants on the forum but isn't anyone taking out dividends to the 20% tax limit better off now?

Eg.

In 2015/16
Salary £8052
Dividends £30899 = £34333 after 10% tax credit so you've hit the £42385 20% limit
Total take home pay = £8052 + £30899 = £38951

In 2016/17
Salary £8052
Dividends: £34648 available as no tax credits anymore which means £5k tax free and £29648 taxable at 7.5% = £27424
Total take home pay = £8052 + £5000 + £27424 = £40476

Unless I've incorrectly picked up that the tax credit is being abolished in favour of the new percentages.

Your numbers are mostly correct, but incomplete.

The cost to your company in 15/16 is £38951. The cost to your company in 16/17 is £42700. That extra £1500 take home comes at a cost of almost £4K to your company. If you needed the extra £1500 take home this year, it would only cost the company £2K rather than £4K.

[mudskipper]

That is correct, make sure to take every dividend possible to the penny and split with Mrs if you have one. Next year you will be getting mugged so prepare yourself.

FTFY.

Let's go with mugged.

[SpontaneousOrder]

That is correct, make sure to take every dividend possible to the penny and split with Mrs if you have one. Next year you will be getting raped so prepare yourself.

All I need after having been mildly sodomised this morning when my lawnmower broke.

Preparing for full-on human-centipede when expense relief is stopped.

Clearly Obsorne is a terrorist.

[NorthWestPerm2Contr]

Cheers for the reply. Maybe that's my confusion, I saw someone earlier post about the fact they'd already paid out the whole dividend premium for the year and were worried about the extra tax implications.

So what you're saying is if my company pays me my dividend before April then there is no further tax to pay?

That is correct, make sure to take every dividend possible to the penny and split with Mrs if you have one. Next year you will be getting raped so prepare yourself.

[Burnerg81]

Hi all.

First post so good to get confirmation from any accountants on the forum but isn't anyone taking out dividends to the 20% tax limit better off now?

Eg.

In 2015/16
Salary £8052
Dividends £30899 = £34333 after 10% tax credit so you've hit the £42385 20% limit
Total take home pay = £8052 + £30899 = £38951

In 2016/17
Salary £8052
Dividends: £34648 available as no tax credits anymore which means £5k tax free and £29648 taxable at 7.5% = £27424
Total take home pay = £8052 + £5000 + £27424 = £40476

Unless I've incorrectly picked up that the tax credit is being abolished in favour of the new percentages.

[zappakat]

Cheers for the reply. Maybe that's my confusion, I saw someone earlier post about the fact they'd already paid out the whole dividend premium for the year and were worried about the extra tax implications.

So what you're saying is if my company pays me my dividend before April then there is no further tax to pay?

[mudskipper]

I;m giving my accountant a couple of days to read through all the gubbins (they've already sent out a general bulletin)

So as a quick question if my tax year is June to May, what tax implications will I get with regards to taking dividends during this period?

i.e Can I take the full £28,500 (quick rounding) at 0%
Will I be caught for all of that with the £5000 0% and £23,500 @ 7.5%
Or will anything paid after April 2016 (for the last 2 months) be taxed @ 7.5%?

Your personal tax year is 6 April - 5 April. This is what is relevant here - nothing to do with your company year end.

[zappakat]

I'm giving my accountant a couple of days to read through all the gubbins (they've already sent out a general bulletin)

So as a quick question if my tax year is June to May, what tax implications will I get with regards to taking dividends during this period?

i.e Can I take the full £28,500 (quick rounding) at 0%
Will I be caught for all of that with the £5000 0% and £23,500 @ 7.5%
Or will anything paid after April 2016 (for the last 2 months) be taxed @ 7.5%?

[Zero Liability]

[tractor]

....

It could still be dead, but they may potentially replace it with something that doesn't require a court case in which they win to apply higher taxes. It'll probably be as simple as just applying a higher tax rate on dividends to "PSCs" where the client is forced into admitting there is some SDC (on a much less strict basis than applies for IR35), which they will probably assume is the case for most "PSCs" operating via an agency, true or not, coupled with threatening to stick the end user with the bill if they don't agree to play ball. I think it'll just be the FLC by another name, but at this point it's all guesswork and little more.

I have been banging this drum for a long time. They are just going after the pipeline knowing that clients will cave in and insist on compliance.

There is only one place to go from there, the number of contractors will shrink significantly, more and more ICTs because there is a skills shortage, far lower costs for the client.

Never mind the quality, feel the width.

WTG supporting us, Dave.