Dividend Calculation Query

[Goodmans]

Hi Contractors

So far this is my income for the 10/11 FinYear and so far I took 22k as dividend. and how much more I can take as dividend and what will be the tax amount if i take any more?. When I spoke to my accountant he says that I have to pay 25% tax if i want to take 10k more dividend. Just confirming with you.

Gross Salary
April ---- £1,000 ------- through own company
May ---- £2,863 ------- through different company
June ---- £4,583 ------- through different company
July ---- £4,583 ------- through different company
Aug ---- £4,583 ------- through different company
Sept ---- £4,583 ------- through different company
Oct ---- £2,500 ------- through different company

Total £24,695
Dividend 22,000
-----------------------------------
Total : 46,695


Thank you so much in advance.
Regards
G

[Lumiere]

According to my calculation you already owe the tax man £1183

[Clare@InTouch]

With that much income you're already into higher rates of tax unless you have an exceptionally high tax code, so your accountant is correct in that any further dividend you take will result in tax of effectively 25% of the amount you take. So take £10,000 and your tax will be £2,500. That extra tax will be on your 10/11 tax return, payable in January 2012.

Assuming a normal tax code of 647L a person can have income of £43,875 before higher rates.

You should also bear in mind the dividend tax credit of 10% - a dividend of £22,000 is in fact £24,444 for tax purposes. That gross dividend (in higher rates) is taxed at 22.5% which equates to 25% of the net.

[Goodmans]

Thanks thats really helped.

Regards
G ;0)