Dividend tax - things I didnt realise

[psychocandy]

OK so maybe I'm stupid but I didnt realise this...

1) If you pay salary of £8000 (or so) this year, then you can pay another £8k in dividends until you pay dividend tax. I must admit I though you just lost your additional £3K personal allowance and still only got £5K dividend tax free.

2) There is no "grossing up" of dividends anymore (wasnt it x10/9?). So this means £30K dividends is not £33333 gross anymore.

[Danglekt]

What difference does eight quid make?

Unless you meant £8k - in which case, please explain as it must have gone over my head too!

[LondonManc]

What difference does eight quid make?

Unless you meant £8k - in which case, please explain as it must have gone over my head too!

He's from South Wales. They fight to the death for £8 in the valleys. HTHBIDI

[SlipTheJab]

Yep thats what my accountant told me, question is whether STJ towers can get by with 32k (16k each for me and Mrs STJ) a year to live on

[Hobosapien]

What difference does eight quid make?

Unless you meant £8k - in which case, please explain as it must have gone over my head too!

Personal allowance (£11k) + £5k divi tax free before paying the new divi tax is how I understand it, rightly or wrongly.

[LondonManc]

Personal allowance (£11k) + £5k divi tax free before paying the new divi tax is how I understand it, rightly or wrongly.

That's how I'd understand it too. Have you asked your accountant™ though?



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[psychocandy]

What difference does eight quid make?

Unless you meant £8k - in which case, please explain as it must have gone over my head too!

£8k FIXED!

[psychocandy]

He's from South Wales. They fight to the death for £8 in the valleys. HTHBIDI

You can take my life but you'll never take my Valleeeeeeyyyyyyyssss!

BTW - you do know that the valleys is only part of south wales don't you? The cities, for instance, are most definitely NOT in the valleys.

[psychocandy]

Personal allowance (£11k) + £5k divi tax free before paying the new divi tax is how I understand it, rightly or wrongly.

Yes thats what my accountant told me. Can't work out in my head how the removal of grossing up makes that much difference though?

Apart from meaning your gross is now less into the next tax bracket? i.e. £30K is now £30K not £33.33K. (I guess £3.33K into 40% means 32.5% on this now not 7.5% so few quid if your close to or over the 40%). Am I right here?

[TheCyclingProgrammer]

2) There is no "grossing up" of dividends anymore (wasnt it x10/9?). So this means £30K dividends is not £33333 gross anymore.

Correct. Even though you'll be paying more tax than before, if you are taking the optimum salary and dividends up to the higher rate threshold then strictly speaking your overall take-home will increase (in other words instead of feeling the effect of the dividend tax in your own pocket, it will impact your company profits instead).