Tax and dividends

thumperrabbit

Hi

Can someone tell me if my understanding is correct here please?

I am a company director of my own small business. I paid myself a salary of £6475 last tax year and have a dividend od £17000. I have no other income.

As far as I understand I will not have to pay tax on the dividend, is this correct? I have paid corporation tax on profits.

Or is this too simplistic, thanks.

chrismac1

Exactly right providing you have no other income. The net dividend of 17,000 is grossed up to 18,888 for the purposes of your tax return. Providing your total income does not take you into higher rate tax, there is no further tax to pay on your dividend.

incidentally you paid about £180 of NI last year for no good reason, as your salary choice was a bit high. Too late for 2010-11, but for 2011-12 the most tax-efficient salary is £602 per month - please see other earlier post by me on this subject.