Changes to Dividend taxation

[worsy]

TheHound said:

HoHoHo said:

So can I assume that starting and running a company having employees paying their way and paying my way in society with all of the agro et al whilst taking dividends on a monthly basis I may as well be better off now getting a job on PAYE?

I'm sure my accountant will provide more details and offer advice however it seems those that take a chance are being well and truly kicked in the balls.

I too am pissed off with this, however we still pay less tax than our PAYE counterparts.

Actually you pay more tax. The difference is NI and that gap has narrowed significantly. Unless you are income splitting there is no significant difference.

[Sonic]

TheHound said:

Don't forget to factor in taking some salary (15/16- £10.6k and 16/17- £11k) (you will have some NI to pay but it'll be fairly minimal) Doing this, total tax for 15/16 will be £29,120 and for 16/17 will be £31,885. Obviously still a difference between the old system and the new but there is still a saving compared with your above example.

Edited by TheHound on Wednesday 8th July 22:03

The tax free allowance is already factored into those calculations.

[surveyor]

I'm still not clear on the banding and where it has come from. It's not what the chancellor nor the policy document published says.

The government will set the dividend tax rates at 7.5% for basic rate taxpayers,
32.5% for higher rate taxpayers and 38.1% for additional rate taxpayers

[anonymous-user]

HoHoHo said:

So can I assume that starting and running a company having employees paying their way and paying my way in society with all of the agro et al whilst taking dividends on a monthly basis I may as well be better off now getting a job on PAYE?

I'm sure my accountant will provide more details and offer advice however it seems those that take a chance are being well and truly kicked in the balls.

You could get a job on PAYE with the company that currently pays you dividends?

[fridaypassion]

I can foresee sales of Safes going up rather significantly!

[HoHoHo]

desolate said:

HoHoHo said:

So can I assume that starting and running a company having employees paying their way and paying my way in society with all of the agro et al whilst taking dividends on a monthly basis I may as well be better off now getting a job on PAYE?

I'm sure my accountant will provide more details and offer advice however it seems those that take a chance are being well and truly kicked in the balls.

You could get a job on PAYE with the company that currently pays you dividends?

I could well do, I own that company and will take advice to minimise any tax paid

[anonymous-user]

HoHoHo said:

I could well do, I own that company and will take advice to minimise any tax paid

Leave it all in the business and then sell/liquidate.

[essayer]

Anyone done the sums on divis vs PAYE on the new system?

[TheHound]

worsy said:

Actually you pay more tax. The difference is NI and that gap has narrowed significantly. Unless you are income splitting there is no significant difference.

Yes but NI is effectivley a tax.

[TheHound]

Sonic said:

TheHound said:

Don't forget to factor in taking some salary (15/16- £10.6k and 16/17- £11k) (you will have some NI to pay but it'll be fairly minimal) Doing this, total tax for 15/16 will be £29,120 and for 16/17 will be £31,885. Obviously still a difference between the old system and the new but there is still a saving compared with your above example.

The tax free allowance is already factored into those calculations.

No they are not... for 15/16 the div tax credit only applies where tax is actually due, so if you only take div and no salary as per the example provided, there is no tax credit for the first 10.6k

and on the 16/17 example you can effectivley get 16k tax free if you take 11k salary to use your personal allowance and then the first 5k divs as your tax free dividend allowance. The orignal calculation didn't factor in either of these points.

I was going to do a breakdown but just take a look at this link.

http://www.uktaxcalculators.co.uk/dividend-vs-sala...

[EddieSteadyGo]

TheHound said:

I was going to do a breakdown but just take a look at this link.

http://www.uktaxcalculators.co.uk/dividend-vs-sala...

Superb link!

This shows clearly that the change to taxation to small business owners is similar to the effect of a 2 or 3p rise in the basic rise in income tax!

[PurpleMoonlight]

EddieSteadyGo said:

TheHound said:

I was going to do a breakdown but just take a look at this link.

http://www.uktaxcalculators.co.uk/dividend-vs-sala...

Superb link!

This shows clearly that the change to taxation to small business owners is similar to the effect of a 2 or 3p rise in the basic rise in income tax!

Yep, if you want to take £50,000 of profit as income you will pay £1,300 additional tax next year.

Interestingly though, if you take £60,000 the increase is only £360.

Maybe it's time for a pay rise then.

[Buster73]

E

fridaypassion said:

I can foresee sales of Safes going up rather significantly!

Too obvious man , still use my biscuit tin.😉

[PurpleMoonlight]

This makes interesting reading.

Profit 2015/16 Tax 2016/17 Tax Tax Increase

20000 2459 2613 154

30000 4459 5213 754

40000 6459 7813 1354

50000 9119 10413 1294

60000 13119 13483 364

70000 17119 18083 964

80000 21119 22683 1564

Edited by PurpleMoonlight on Thursday 9th July 08:29

[Phooey]

£28600.00 of divi's for 2015/16 tax yr = £0.00 Tax

£28600.00 of divi's for 2016/17 tax yr = £1770.00 Tax (£3540.00 if your partner/wife etc takes an equal share of dividends)

http://www.uktaxcalculators.co.uk/dividend-tax-cal...

Edited by Phooey on Thursday 9th July 08:58

[Eric Mc]

Company directors will just have to be a bit cleverer in defining what their withdrawals from their own companies relate to.

There may be some scope in increasing salary levels but at the same time making sure that the company makes use of the NI concession for small traders (this isn't an option for single director companies).

[PurpleMoonlight]

Eric Mc said:

Company directors will just have to be a bit cleverer in defining what their withdrawals from their own companies relate to.

Indeed.

If over age 55 there is scope to pay to a pension scheme and draw that immediately, 25% would be tax free. The limit is £40,000 for the first tax year but £10,000 therafter.

[dirty boy]

Eric Mc said:

Company directors will just have to be a bit cleverer in defining what their withdrawals from their own companies relate to.

There may be some scope in increasing salary levels but at the same time making sure that the company makes use of the NI concession for small traders (this isn't an option for single director companies).

We were just discussing the single director company situation. Have you seen anything to indicate if it's a single director company 'with' employees that is being scooped up here accidentally?

[Eric Mc]

Nothing on that specific topic. I would advise listening to Radio 4 programmes like Money Box (Saturday - noon) or Money Box Live (Wednesday 3.00 pm) for general discussion on the Summer Budget. There was a Money Box live yesterday on covering the budget which will be available on iPlayer.

[Okrib]

On a separate - but related - note, why is a personal allowance not transferrable between married couples?

It seems very unfair to me.