Dividend tax in 2018-19
From April 2015, the personal allowance is increasing to £10,600. The employment allowance (tax break on the first £2k of employer NI) will still apply.
For company directors who wish to pay themselves a low salary and the balance they take out of the company as dividends, the two remuneration options are:
Option 1: the most tax efficient if your only income is remuneration from your limited company
Gross monthly salary £883.33 (£10,600 personal allowance divided by 12)
Employee NI due £25.40
Net salary payable to you £857.93 > £10,295.16 for the year
Dividends before you pay any additional tax £28,606.50
Option 2
Salary £672 per month > £8,064 for the year (no NI liability)
Dividends before you pay any additional tax £30,888.90
You get national insurance credits under both options.
The company has to be registered as an employer and file RTI returns.
A dividend is a distribution of after tax profits so it is essential that the company has sufficient retained profits to pay a dividend.
About the author
Ingrid Niang est expert-comptable britannique avec seize ans d’expérience variée en Angleterre. De nationalité française, elle a créé son cabinet FRAccountants en 2009 et travaille tout particulièrement avec des entrepreneurs, chefs d’entreprise et consultants français ou francophones ayant une activité commerciale au Royaume-Uni. Elle leur apporte un suivi et conseil sur mesure leur assurant de se conformer aux exigences comptables et fiscales britanniques.
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