Dividends question


I

Ian Gregory

It's coming to the end of my accounting period and my limited company
has made just under £10k in profit this year. I've paid myself (the
sole director) a minimal wage all year. I am a basic rate taxpayer.

Am I correct in thinking the following:

- Because my company's profit is less than £10k it falls into the 0%
band for Corporation Tax?

- If I were to pay myself the full profit (just under £10k) as a
dividend, because this would not take me into the threshold for higher
rate income tax there would be no further income tax due on this sum?

Am I missing anything here?

Cheers,

Ian
 
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J

Jon Griffey

Ian said:
It's coming to the end of my accounting period and my limited company
has made just under £10k in profit this year. I've paid myself (the
sole director) a minimal wage all year. I am a basic rate taxpayer.

Am I correct in thinking the following:

- Because my company's profit is less than £10k it falls into the 0%
band for Corporation Tax?

- If I were to pay myself the full profit (just under £10k) as a
dividend, because this would not take me into the threshold for higher
rate income tax there would be no further income tax due on this sum?

Am I missing anything here?

Cheers,

Ian
This is basically correct.

Hence a husband and wife with a limited company can earn 19,230 (10,000
CT 0% band plus 2 x 4,615 salary) and not pay a bean in tax.

I wonder how long this will last.

What is often overlooked is that this 10K threshold is divided by the
number of associated companies. For example if your wife runs a
separate limited company then this 10K becomes 5K each.
--
Jon Griffey FCCA ATII
Hackett Griffey
Chartered Certified Accountants & Registered Auditors
2 Mill Road, Haverhill, Suffolk, CB9 8BD

Tel (01440) 762024

www.griffey.demon.co.uk

See website for disclaimers
 

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