Use ISA savings account to pay dividends Use ISA savings account to pay dividends
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  1. #1

    Nervous Newbie


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    Default 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. #2

    Fingers like lightning


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    Quote 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; 26th October 2019 at 19:05.

  3. #3

    My post count is Majestic

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

  4. #4

    Contractor Among Contractors


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    Jesus wept...

    Get an accountant, you desperately need one.

  5. #5

    Should post faster


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

    if only..

  6. #6

    Super poster

    Lance's Avatar
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    Quote 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

  7. #7

    Contractor Among Contractors


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    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.

  8. #8

    Fingers like lightning


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    Quote 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!

  9. #9

    Still gathering requirements...


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    Holy tulip.

  10. #10

    Super poster


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

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

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