Reply to: Taking dividends next year

[Lance]

Taking dividends next year

Because you pay in for 50 years then die a few years before or after you cash in, and don’t need much money when you are 70 anyhoo, and if you pay in nothing the state will provide everything free also


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All of which is true (apart from the state providing everything..... my definition of needs are not the same as the state), but does not make it a Ponzi scheme.....

[WordIsBond]

Because you pay in for 50 years then die a few years before or after you cash in, and don’t need much money when you are 70 anyhoo, and if you pay in nothing the state will provide everything free also

I have grandchildren in 3 different countries and hoping for four. I want to retire rich enough to see them all every year, and if I die early, I'm glad I'm leaving them something. State won't provide that.

[GhostofTarbera]

You will never be able to explain why pensions are not Ponzi schemes to the satisfaction of Peter simpleton.

He needs to explain why he thinks they are...

Because you pay in for 50 years then die a few years before or after you cash in, and don’t need much money when you are 70 anyhoo, and if you pay in nothing the state will provide everything free also


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[Lance]

This is a load of tosh, but you probably don't want to know why. If you do, let me know and I'll answer it, but I'm really only answering for anyone else who might be reading it and confused by what you said.

You will never be able to explain why pensions are not Ponzi schemes to the satisfaction of Peter simpleton.

He needs to explain why he thinks they are...

[WordIsBond]

Pensions are a ponzi scheme and everyone knows it.

This is a load of tosh, but you probably don't want to know why. If you do, let me know and I'll answer it, but I'm really only answering for anyone else who might be reading it and confused by what you said.

[PeterSim]

exactly.
And 32% tax is 8% less than a permie would pay on the same money.
And Peter Simpleton can still pay into his pension.

Yes it is very simple. With the benefit of the security of permanent employment the pay is a lot less, often twice as low or more in some cases. With the negative of contracting, they get no sick pay, no benefits, they can't even use the cafe or staff only bathrooms.

Pensions are a ponzi scheme and everyone knows it. If you want to put money in to a pension you should be free to do that. I should not be forced to enter in a public or private ponzi scheme as it is against my freedom. Yes I do opt out of private pension even when the government forces my employer to match my contribution, I still opt out. Many people think it is tax free but it gets taxed on the way out at the same rate and I will be already too old to use it. There is also a big risk that there will be nothing there to take or that inflation will destroy it. I'd rather build up a business than be an employee working 9-5 waiting for my pension so that I can be old and miserable and rich. I want the money now so that i can build a business and wealth. For that reason, I happy to accept the risk of contracting if it means I am able to achieve my goals of creating a business and building wealth.

Unfortunately HMRC has seen it fit to define forming a business as tax evasion. So I will be forced to move to another country to achieve my goals.

[CompoundOverload]

but you can't do that with POA.
Not even sure what HMRC would make of you paying dividend tax that is not yet even forecast to be owed. I'm sure they'd be happy that you're in credit but it begs the question "Why on earth would you do that?"
Or are you not explaining yourself properly?


To be clear.....
I've paid my SATR for 2018/2019 in January 2018 by POA.
In Jan 2019 I paid POA for tax year 2019/2020 (current year).
I've just paid half of my POA amount for tax year 2020/21.

So I don't owe for the dividends I am currently taking out as I've already paid it. Assuming that my drawing are broadly in line with the POA calculation.

I was not clear with my response. When I draw a big amount in dividends, I put by the tax I owe on them aside, so when the bill comes in to make the div tax payment on these, the funds are there waiting for when the liability comes calling.

[WordIsBond]

Yep - when i take divs out I cleaer the amount owed with those same divs , rather than doing it on the drip over Jan & July.

Thanks!

Put it in a savings account, pay it in Jan/July. Sure, it's not a lot, but it adds up over time. Free money.

[Lance]

Yep - when i take divs out I cleaer the amount owed with those same divs , rather than doing it on the drip over Jan & July.

Thanks!

but you can't do that with POA.
Not even sure what HMRC would make of you paying dividend tax that is not yet even forecast to be owed. I'm sure they'd be happy that you're in credit but it begs the question "Why on earth would you do that?"
Or are you not explaining yourself properly?


To be clear.....
I've paid my SATR for 2018/2019 in January/July 2018 by POA.
In Jan/July 2019 I paid POA for tax year 2019/2020 (current year).
I've just paid half of my POA amount for tax year 2020/21.

So I don't owe for the dividends I am currently taking out as I've already paid it (Jan/July 2019). Assuming that my drawings are broadly in line with the POA calculation.

[CompoundOverload]

it's what you pay before you owe it.
I've already paid half my tax SA for tax year 2019/2020 even though the year hasn't ended.

Understand your Self Assessment tax bill: Payments on account - GOV.UK

Yep - when i take divs out I cleaer the amount owed with those same divs , rather than doing it on the drip over Jan & July.

Thanks!

[Lance]

POA?

it's what you pay before you owe it.
I've already paid half my tax SA for tax year 2019/2020 even though the year hasn't ended.

Understand your Self Assessment tax bill: Payments on account - GOV.UK

[WordIsBond]

POA?

Payment on Account (for self assessment). The amount you have to pay every Jan/July.

[CompoundOverload]

yup.
And make changes to the POA at the same time if you need to. Which is likely as you'll be draining the company so no expected POA.

POA?

[Lance]

If go PAYE but want to keep the LTD open and drain the divs to "top up" the salary, I presume you would just simply disclose the divs as normal via a SATR and pay the tax separately for the divs?

yup.
And make changes to the POA at the same time if you need to. Which is likely as you'll be draining the company so no expected POA.

[northernladuk]

If go PAYE but want to keep the LTD open and drain the divs to "top up" the salary, I presume you would just simply disclose the divs as normal via a SATR and pay the tax separately for the divs?

Of course. Nothing changes in that respect.