tax on dividends

kammx4

Hi I have a small ltd company that earns about £2400 a month and I pay myself and wife £1200 a month. I have no other income and wondered if I would pay any tax on 2 dividends I have taken of £4500. I am unsure of anything to do with dividends. Thanks

zygurat789

kammx4 wrote: »

Hi I have a small ltd company that earns about £2400 a month and I pay myself and wife £1200 a month. I have no other income and wondered if I would pay any tax on 2 dividends I have taken of £4500. I am unsure of anything to do with dividends. Thanks

Given your query I hope you have an accountant for this Ltd.
Your dividend comes with a tax credit of 10% and is declared gross on your tax return ie £5000 this is taxed, because it is an ltd dividend at 10% ie £500 and the tax credit of £500 is taken off your payable liability.
Net result, as you should have worked out by now, is nil because the dividend is paid out of earnings which have already been taxed at 20% corporation tax.
If your is above the higher rate threshold, then the tax you pay on your dividends is 32.5%, and the tax credit is still deducted but there is tax payable.

greyteam1959

Speak to your accountant......if you have one.
If not get one ASAP.

trailingspouse

Avoid paying your dividends monthly and for the same amount every time - that begins to look suspiciously like a salary, and the taxman won't like that.

And seriously - get an accountant. As I've said on other people's threads, the ways of getting things wrong with a limited company are many and varied.

trailingspouse

Also, I'm concerned that you said 'wondered if I would pay any tax on 2 dividends I have taken of £4500'. You haven't taken 2 dividends. You have taken one, and your wife has taken one. Her dividend is her money, and is taxed accordingly.

Kernel_Sanders

trailingspouse wrote: »

You haven't taken 2 dividends. You have taken one, and your wife has taken one.

You cannot deduce that from the meagre information
supplied by the OP. He doesn't
state (or even imply) that his wife is actually a shareholder.

Aquamania

Last summer the OP posted a thread saying he was a contractor on the railways.
https://forums.moneysavingexpert.com/discussion/4666569

If that is the same business, I wonder what he is paying his wife £1200 a month for? :huh:

Suarez

Maybe she helps to lay the railway line

zygurat789

Aquamania wrote: »

Last summer the OP posted a thread saying he was a contractor on the railways.
https://forums.moneysavingexpert.com/discussion/4666569

If that is the same business, I wonder what he is paying his wife £1200 a month for? :huh:

That's not what he said. It makes far more sense if it's £600 each