taxing question!

arsenalboy

Going to start my own limited company and will be the sole worker.
I am trying to understand the tax treatment on dividends I pay myself.

With divis I receive from quoted companies, I add back the tax deducted, tax at 40% and knock off the tax credit, the net effect is that I pay 40% on divis I receive.

With my own company, i I do the same calculation it means I will pay 50% ie., 40% income tax and 20% corporaton tax less the 10% tax credit?
Or is there a different treatment when it is your own company so that the total liability is still 40%.?

David170607

If you are going to start a company you should get a QUALIFIED accountant to advise you about paying yourself.

You need to be aware of the correct procedure for paying dividends, the problem of what is known as "IR35", the operation of PAYE on your salary, the taxation of benefits-in-kind, tax on an overdrawn director's current account, and so on, and so on.

You also need advice on the books and records that a company is required to keep, filing of accounts and returns at Companies House, taxation of the profits of the company, and more!

reddevilled

arsenalboy wrote: »

Going to start my own limited company and will be the sole worker.
I am trying to understand the tax treatment on dividends I pay myself.

With divis I receive from quoted companies, I add back the tax deducted, tax at 40% and knock off the tax credit, the net effect is that I pay 40% on divis I receive.

With my own company, i I do the same calculation it means I will pay 50% ie., 40% income tax and 20% corporaton tax less the 10% tax credit?
Or is there a different treatment when it is your own company so that the total liability is still 40%.?

You do not pay 40% tax on any dividends. Broadly speaking you pay no tax on a dividend if you are not a higher rate tax payer, and 25% of the dividend received if you ARE a higher rate tax payer.

Bean_Counter

arsenalboy wrote: »

Going to start my own limited company and will be the sole worker.
I am trying to understand the tax treatment on dividends I pay myself.

Here's quite a straightforward article on the taxing of dividends inthe UK:

http://www.direct.gov.uk/en/MoneyTaxAndBenefits/Taxes/TaxOnSavingsAndInvestments/DG_4016453