Multiple companies

[PurpleMoonlight]

Any thoughts on multiple companies to avoid the new 7.5% Dividend tax from April 2016?

Each could pay £8000 pa PAYE so only income tax and no NI.

[PurpleMoonlight]

Income tax yes, NI no.

[spikeyhead]

You'd end up paying more in accountants fees than you'd save in NI

[PurpleMoonlight]

The purpose isn't to avoid NI, but you are correct the accounting cost would need to be taken into account and might mean it not worth all the effort.

[MrSparks]

I don't get it? Why not just pay £16,000 PAYE from one company?

As mentioned it sounds like far too much aggro and accountancy costs to avoid paying a bit of employer's NI. You'll still pay personal NI and tax etc.... regardless of where it comes from.

This new taxation is definitely grounds to pay your wife/child/dog and buy a nice company vehicle and anything else you can get away with though!! But doing what you suggest looks far more like an attempt at tax avoidance more than anything else.

[DavidY]

Your personal allowance is just that a personal allowance, it should not be applied to every company that pays you, and in effect you will have different Tax Coding notices from each employer. From this article HMRC says that it is your responsibility to check that you have the correct coding.

http://www.telegraph.co.uk/finance/personalfinance...

So your employed income would be £8K x the number of employers that you have, and from that total amount you deduct a personal allowance, and pay basic and higher rate tax the normal way. Yes there is an NI saving, but the admin costs will probably eat that up.

Much better in my view is to to a though analysis of your business, see where it can be grown, and what cost savings can be applied, so that income can be maximised. Grow the business and you will probably more than offset the increase in taxation. Think positively!!!

Your plan even if it would work, would be seen as deliberate tax evasion, as all this companies are doing is just laundering money!! I'm sure your accountant will advise you (and tell you to stop wasting your time!!!)

Having said all that, I think that this is probably the thin end of the wedge and it's just a method to eventually put everybody on PAYE

[PurpleMoonlight]

DavidY said:

Having said all that, I think that this is probably the thin end of the wedge and it's just a method to eventually put everybody on PAYE

Or making there no advantage to taking minimal salary and maximum dividends.

The trouble with that is they impose a significant tax charge on legitimate investors who have high dividend income, probably via Plc's.

[Eric Mc]

Yes - blame the abusers.

It's the tax avoidance abusers who ruin what were good tax rules designed for specific purposes.