• Visitors can check out the Forum FAQ by clicking this link. You have to register before you can post: click the REGISTER link above to proceed. To start viewing messages, select the forum that you want to visit from the selection below. View our Forum Privacy Policy.
  • Want to receive the latest contracting news and advice straight to your inbox? Sign up to the ContractorUK newsletter here. Every sign up will also be entered into a draw to WIN £100 Amazon vouchers!

Use ISA savings account to pay dividends

Collapse
X
  •  
  • Filter
  • Time
  • Show
Clear All
new posts

    Use ISA savings account to pay dividends

    Hello,

    I have been contracting for a year and a half now and I have some money in my bussiness account I would like to pay as dividend.

    I have been paying myself an annual salary of £8424 and haven't paid any dividend so far.

    Checking the rates,we have a £2000 allowance and a 7.5% basic rate.

    I am intending to pay £20000 in dividends , which means £1,419 of tax.

    I was thinking about using an ISA account to pay dividends. Theoretically dividends paid in ISA account (up to 20k) are tax-free? Would it make any difference if I pay dividends to my personal account or to an ISA account?

    It is the first time I pay dividenda and I am new with ISA accounts as well..

    Many thanks

    #2
    Originally posted by Zeroc View Post
    Theoretically dividends paid in ISA account (up to 20k) are tax-free?
    No, this is wrong, theoretically and in practice.

    Interest or dividend earned from capital/shares in an ISA account are tax free, but you can't avoid paying the 7.5% dividend due from payments from your business by paying those dividends into an ISA account.

    Not sure how you calculate the £1,419 figure either. Its 7.5% of neither £20K nor £18K.
    Last edited by Paralytic; 26 October 2019, 19:05.

    Comment


      #3
      If you haven't got one, it would be a good idea to get an accountant.
      'CUK forum personality of 2011 - Winner - Yes really!!!!

      Comment


        #4
        Jesus wept...

        Get an accountant, you desperately need one.

        Comment


          #5
          I think he wants to place his company under an ISA and therefore benefit from the dividends.

          if only..

          Comment


            #6
            Originally posted by ContractorBanking View Post
            I think he wants to place his company under an ISA and therefore benefit from the dividends.

            if only..
            A stocks and shares ISA......
            Sounds too good to be true....... It is https://www.contractoruk.com/forums/...hares-isa.html
            See You Next Tuesday

            Comment


              #7
              Any money moving from your company to you will be taxed as income or as a dividend (obviously not including your personal allowances) - nothing can stop this (short of shutting down the company). There is no way of avoiding this.

              ISA removes the tax you pay on interest you earn from money in your ISA up to the ISA limit.

              You need an accountant. You also probably want to read up on the basics of financial management. Maybe spend some time on the Martin Lewis site or something.

              Comment


                #8
                Originally posted by Lance View Post
                A stocks and shares ISA......
                Sounds too good to be true....... It is https://www.contractoruk.com/forums/...hares-isa.html
                Point me to an ISA provider that will let you buy shares in your own Ltd company.

                Zeroc, all you need to do is to grow your company and have it listed on a recognised exchange, then you're set!

                Comment


                  #9
                  Holy tulip.

                  Comment


                    #10
                    Originally posted by Zeroc View Post
                    Theoretically dividends paid in ISA account (up to 20k) are tax-free?
                    That is some ******* theory!

                    Originally posted by Zeroc View Post
                    I am new with ISA accounts as well..
                    No tulip!

                    Comment

                    Working...
                    X