Taper relief withdrawn

[minstrel]

18% is better than dividends. Rough guesstimate 1/2 of you'd pay if you take as dividends.

Remember the 18% is on top of the corporation tax (which is rising to 22%) your company has already paid.

So, with £100k profit capital distribution route would be £100k - 22% (CT) = £78k capital distribution which is then taxed at 18% which gives around £64k (closer to £66k with a £10k capital gains allowance).

With £100k profit the dividend route would be £100k - 22% (CT) = £78k. Adding 10% dividend credit and then applying 32.5% higher rate dividend tax gives you £58.5k.

[lilelvis2000]

I never knew owning a Ltd. co would be so damn complex.

I must say I have a LOT of cash and some assets in the assets in the company...some of them being loans. I know I know, slap on the hand.
Should I take out a £30K divi and clear most of the cash out now?

[dude69]

I never knew owning a Ltd. co would be so damn complex.

I must say I have a LOT of cash and some assets in the assets in the company...some of them being loans. I know I know, slap on the hand.
Should I take out a £30K divi and clear most of the cash out now?

Loans should be kept below £5k and repaid in same year, except possibly season ticket loans.

You can retrospectively regularize them using a backdated dividend declaration.

It is sensible to pay a £30k dividend (treated as £33.33k income of course, because of the 10% tax credit) as early as possible in the tax year (assuming you have sufficient retained profit), because the money is better in your hands than the company's.

Does mean that any further dividends in the year will attract higher rate income tax.

[IR35 Avoider]

But the company has already paid full CT on it. What you really mean is you personally will pay no extra income tax on it which is a different thing.

Yes, that is what I meant. The corporation tax is irrelevant, because it is exactly the same whether you take money as dividends or capital gain. For money which is destined to saved rather than spent, I regard paying any CGT at all as tax inefficient, because there's an alternative route to getting money out of the company that will cost me nothing extra.

[adder]

Yes, that is what I meant. The corporation tax is irrelevant, because it is exactly the same whether you take money as dividends or capital gain. For money which is destined to saved rather than spent, I regard paying any CGT at all as tax inefficient, because there's an alternative route to getting money out of the company that will cost me nothing extra.

Any chance of sharing this alternative route that costs nothing extra?
TIA!

[Hiram King Of Tyre]

Do does this mean that if you buy AIM shares and keep them for 2 yrs and then make a £1000 profit, the tax changes from £100 to £180?

[Pickle2]

Do does this mean that if you buy AIM shares and keep them for 2 yrs and then make a £1000 profit, the tax changes from £100 to £180?

yes. AIM shareholders will be hit as you describe. But dont forget you have a 9k allowance to use up first before any tax is due.

[Hiram King Of Tyre]

yes. AIM shareholders will be hit as you describe. But dont forget you have a 9k allowance to use up first before any tax is due.

So did I before!! my tax liability has almost doubled.... should have bought a buy to let

[TheFaQQer]

So did I before!! my tax liability has almost doubled.... should have bought a buy to let

You'll still pay CGT when you sell though.

[Hiram King Of Tyre]

You'll still pay CGT when you sell though.

Yes but the tax has gone down from 40% to 18%!