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Salary or bonus?

2019-11-01T21:15:38+00:00November 9th, 2019|Categories: Blog, PAYE|Tags: , , , |

As 31 December approaches, many companies will be getting ready to tie up tax matters for their financial year-end and giving consideration to salaries, bonuses and dividends. Given current tax rates, paying a dividend rather than a salary will often be a more cost-effective way of withdrawing profits from a company. However, if the company is loss-making and has no retained profits, it will not be possible to declare a dividend, and an alternative will need to be considered. This often involves an increased salary or a one-off bonus payment. From a tax perspective, the position will be the same [...]

Dividend Allowance

2019-08-23T16:23:01+01:00July 31st, 2019|Categories: Blog, Limited Company, Personal Finance, Taxation|Tags: , , |

Many family-owned companies allocate dividends towards the end of their financial year and/or the tax year, which means that the impact of the reduction in the dividend allowance from £5,000 to £2,000 from 6 April 2018 is only now starting to come to light. Many other taxpayers may not become aware of the change until they complete their 2018/19 tax return, which in most cases, will be due for submission to HMRC by 31 January 2020. The amount of tax payable on a dividend will primarily depend on which tax band the first £2,000 falls in. The tax rates on dividend [...]