Umbrella employee taking dividends from dormant company

[Dib]

Hi contractors, need some advise here:

1) Can I take dividends from a dormant company whilst working for an umbrella?

2) If yes, and I take dividends from my dormant company, what tax rate would I be looking at? Will these these be the usual dividends tax rate of 7.5%, 32.5% and 38.1%? Or would it be something different?

How does it work?

Thanks

[Paralytic]

Deleted

[Dib]

What does your accountant say?

Not much - still waiting for an answer

[malvolio]

Why does it matter? Divis are paid from retained profits; AFAIK the company doesn't have to be actively trading to pay them. You will have to declare them on your next SAR of course.

The umbrella isn't involved at all, any more then MyCo is when I get a share dividend from Barclays.

[Dib]

Why does it matter? Divis are paid from retained profits; AFAIK the company doesn't have to be actively trading to pay them. You will have to declare them on your next SAR of course.

The umbrella isn't involved at all, any more then MyCo is when I get a share dividend from Barclays.

Thanks. This is informative.

I am aware I have to include them on my next SATR, but will they be taxed as dividends at 7.5, 32.5, 38.1 (depending on how much I take) or something different?

[malvolio]

Thanks. This is informative.

I am aware I have to include them on my next SATR, but will they be taxed as dividends at 7.5, 32.5, 38.1 (depending on how much I take) or something different?

Ask your... oh, hang on...

They are dividends. Dividend taxation rules will apply. The SATR software will (or at least should!) apportion your annual income to the right bands; it will al ready have the umbrella company monies in there.

[cojak]

No, we are not deleting this thread, there is good info for others to benefit from it.

[Dib]

Thanks, I have asked my accountant but he is taking some time to get back to me...

[ladymuck]

Hang on...

If the company is dormant, why is it paying a dividend? You do realise that by having a transaction go through the book you will have to produce full accounts for the year?

Or do you mean the company is live but you're just not using it?

Your PAYE income is separated on your SATR and you just plug in the numbers from the P60. You shouldn't have any residual tax to pay on this, unless the umbrella has screwed up.

Dividends are calculated separately at 0% for the first £2k then 7.5, 32.5, 38.1 as you hit each band.

[Dib]

Hang on...

If the company is dormant, why is it paying a dividend? You do realise that by having a transaction go through the book you will have to produce full accounts for the year?

Or do you mean the company is live but you're just not using it?

Your PAYE income is separated on your SATR and you just plug in the numbers from the P60. You shouldn't have any residual tax to pay on this, unless the umbrella has screwed up.

Dividends are calculated separately at 0% for the first £2k then 7.5, 32.5, 38.1 as you hit each band.

It is my understanding that a dormant company can release dividends. I am still waiting fro my accountant to get back to me. They are busy due to covid-19 issues. I will post a reply once I know for sure what can/can't do.