Are you paying tax on your dividends?
Are you wondering if a limited company is right for you?
The problem — tax on dividends
If you are a higher rate taxpayer then you will pay 20% corporation tax and another 32.5% income tax.This is more than paying 40% tax in your own personal name. So, why would you set up a limited company just to pay more tax?
1st £5,000 dividends are tax-free
A rather surprising tax change in the budget announcement was that the first £5,000 in dividends will now be tax-free, irrespective of your earnings. As a higher rate taxpayer you may previously have thought twice about taking any money out of the company. Now that you can take £5,000 out of the company tax-free, why wouldn’t you?
Next steps — being more tax efficient
If you want to understand how to implement this strategy or to discuss other finance/tax questions then please book some time with us using the below calendar:
Please use the redeem code “Article 33” to get 33% off your next consultation call.
If you are looking for a new accountant then please book some time with us using the below calendar. Please note that this booking is to describe our services and will not be used to discuss your personal tax affairs.