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Salary v dividend

2019-09-01T12:00:55+01:00March 19th, 2017|Categories: Limited Company|Tags: , , |

The questions surrounding the issue of how best to extract profits from a company in a tax-efficient manner remain as popular as ever. Despite the introduction of the dividend allowance, and the personal savings allowance, extraction by remuneration and by way of dividend remain the two most widely used methods. The tax effects of these methods may be broadly contrasted as follows: Provided the amount is justifiable, remuneration is generally allowed as a deduction in arriving at the taxable profits of the company. The recipient is taxed on the remuneration through the PAYE system at the date of payment [...]

Dividend Allowance

2019-09-01T11:41:36+01:00September 26th, 2016|Categories: Limited Company|Tags: , , , |

Legislation included in Finance Bill 2016 implements the new 0% rate for dividend income, as well as changing the rates of tax for dividend income. Once enacted, the changes will apply from 6 April 2016. Broadly, the new nil rate applies to the first £5,000 of a person's dividend income and is available annually. From 6 April 2016, UK residents pay tax on any dividends received over the £5,000 allowance at the following rates: 7.5% on dividend income within the basic rate band; 32.5% on dividend income within the higher rate band; and 38.1% on dividend income within the [...]