Hi
I'm moving from permanent to contractor next week and am looking to see if I can get my first dividend under this years rules.
My first invoice will be issued before the end of the month but the clients payment schedules means that they won't be settled until 5th March. My first question is does the invoiced amount represent company profits from which I can take a dividend or would I need to wait until the cash is in the business account? Could I declare a dividend based on the invoice but not pay it until the cash is in the account or can a company only declare dividends from actual cash it has?
I've projected that next years dividends will take me into the 32.5% bracket so believe that any dividends not taken this year will be taxed at that level (if I take them all out). YTD my paye earnings are £36k with no dividends. I therefore think that, if the option is available, it would be better to take the dividend in this years tax. My final question then is does the dividend tax rate calculated on dividend earnings or total earnings?
I appreciate this is a question for an accountant but I wasn't intending to get one until the business had some cash flowing through it as whilst I'm making the transition my personal reserved are already stretched.
Thanks in advance for any help.
I'm moving from permanent to contractor next week and am looking to see if I can get my first dividend under this years rules.
My first invoice will be issued before the end of the month but the clients payment schedules means that they won't be settled until 5th March. My first question is does the invoiced amount represent company profits from which I can take a dividend or would I need to wait until the cash is in the business account? Could I declare a dividend based on the invoice but not pay it until the cash is in the account or can a company only declare dividends from actual cash it has?
I've projected that next years dividends will take me into the 32.5% bracket so believe that any dividends not taken this year will be taxed at that level (if I take them all out). YTD my paye earnings are £36k with no dividends. I therefore think that, if the option is available, it would be better to take the dividend in this years tax. My final question then is does the dividend tax rate calculated on dividend earnings or total earnings?
I appreciate this is a question for an accountant but I wasn't intending to get one until the business had some cash flowing through it as whilst I'm making the transition my personal reserved are already stretched.
Thanks in advance for any help.
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