Switching From Contracting To PAYE - Dividend Tax Switching From Contracting To PAYE - Dividend Tax
Posts 1 to 4 of 4
  1. #1

    Nervous Newbie


    Join Date
    Apr 2018
    Posts
    3

    Default Switching From Contracting To PAYE - Dividend Tax

    We have hit April 2108 and I have a dilemma.

    I went contract in Dec 17 after being permanent employee, between this time I did not pay myself a salary as a contractor as i already earned over the tax threshold in my previous employment, so after taking expenses back in March 2018 I took only a tax free dividend of £5k for that tax year which i believe was in my personal allowance.

    However we are now in April 2018-April 2019 - my contract is coming to an end and i am looking to pay myself more dividends.

    Problem is I'm going back to permanent employment and salary in next few months. around £60k and will enter the higher tax bracket

    Therefore If i pay myself dividends from my company of £2000 tax free and say another £10,000 @7.5% tax before i start my paye job, - will later in the year when I'm earning about £60k as a paye employee - will this the force me to pay much more tax on the £10,000 dividend i though i was only going to pay 7.5% tax on.

    Am i better to completely wind the company up, what would be the benefits and down sides of this?

    Any ideas? Anything on web i can find on this only talks about dividends as a contractor being in certain thresholds , ans assumes you will continue to be a contractor.I cant find much on the implications of going back the way from contractor to paye in the same tax year.

    Regards

    Alan
    Last edited by alanm; 26th April 2018 at 20:26.

  2. #2

    Super poster

    Lance's Avatar
    Join Date
    Sep 2013
    Location
    home
    Posts
    4,370

    Default

    Whether you’re perm or contractor is immaterial. It’s about your remuneration. The calculators can work this out for you.
    Or you could ask your accountant.......
    See You Next Tuesday

  3. #3

    More time posting than coding


    Join Date
    Apr 2016
    Location
    Between Leeds & London
    Posts
    347

    Default

    Could be a few options regarding the funds left in the company, probably best to speak with the accountant so can run through in detail. Any pension scheme in place for example, are you looking to stay perm, are you going perm at the place were contracting.
    Last edited by Contractor UK; 27th April 2018 at 11:24.

  4. #4

    Nervous Newbie


    Join Date
    Apr 2018
    Posts
    3

    Default

    yes going perm with company ive been working with via an agency., probably stick with from now on


    am wanting to avoid paying a mass on dividends caused by the salary I'm about to earn from june onwards. lots of cash in account , looking for best way to get it out before i switch, will have no need for ltd company in future though.

    am thinking winding it up may be better?

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •