LTD Company Tax Calculator?

Dazed_and_confused

but hasnt £5000 of the basic rate band been used by the 0% dividend rate band?

polymaff

polymaff wrote: »

No. Are you confusing the company's distributable £32,000 with the individual income tax payer's basic rate band £32,000?

Dazed_and_confused wrote: »

but hasnt £5000 of the basic rate band been used by the 0% dividend rate band?

Separate out in your mind the actions of the "persons" involved.

A Limited Company has distributable reserves, added to by its post-tax profits and depleted by distribution of dividends and by investments in assets.

When the company makes a distribution then it pays out money and shareholders receive money. That's where the separation occurs. The Limited Company doesn't want or need to know anything about the shareholders' tax affairs - and vice versa.

Each recipient of such a distribution will be liable to tax which, depending upon his/her personal circumstances may include elements at 0%, 7.5%, 32.5% and 38.1%

Dazed_and_confused

I do understand the company and individuals tax being separated but had been looking at the link darksparkle provided in an earlier post and example 6 seems to be relevant here

https://www.gov.uk/government/publications/dividend-allowance-factsheet/dividend-allowance-factsheet#examples

polymaff

Dazed_and_confused wrote: »

I do understand the company and individuals tax being separated but had been looking at the link darksparkle provided in an earlier post and example 6 seems to be relevant here

https://www.gov.uk/government/publications/dividend-allowance-factsheet/dividend-allowance-factsheet#examples

The example in this thread is not the same as example 6 - and the rest of us are addressing the former. In particular, I entered the thread to try to address a problem you were apparently having with booksurr's comment. My comments therefore stand as guidance as to how the Limited Company's and the shareholders' affairs will pan out in the light of the information so far supplied by the OP.

If the parties involved have other sources of taxable income, then they will need to be considered in working out their income tax liabilities but, whatever, I believe that the comments I've made will not be wrong - which is a pretty good aim to set and achieve on MSE

Dazed_and_confused

We are all trying to help the op, my concern was that the following part of booksurr's post could be misinterpreted,

Any dividend in excess of 16k (and with no other income at all for that person) would be taxed at 7.5% up to the ceiling of the basic rate tax bracket ie. £32,000

And I think example 6 darksparkle has posted shows that to be the case. If we take example of £11000 directors salary and dividend of £40000 then the tax position in 2016:17 would surely be

Salary £11000 - no tax, covered by personal allowance
Dividends £40000
5000 x 0% (dividend allowance/rate band)
27000 x 7.5% (normal dividend rate)
8000 x 32.5% (higher dividend rate)

How would you calculate the tax for 2016:17?

TaxQuestions_2

Pennywise wrote: »

In reality, how was the money paid to the directors/shareholders?

If you've just taken bits of money out over the year without it properly being payroll or dividends, then it's a loan and everything re tax is different.

Yes, I've just been taking the money out of the business account as soon as it comes in each month.

Oh dear, sounds like I've made a few mistakes this year.

Will see what the accountant makes of it all when I submit the info

Hopefully I won't go to prison for tax evasion.

booksurr

TaxQuestions wrote: »

Yes, I've just been taking the money out of the business account as soon as it comes in each month.

Oh dear, sounds like I've made a few mistakes this year.

Will see what the accountant makes of it all when I submit the info

Hopefully I won't go to prison for tax evasion.

depending on how pragmatic your accountant is that is exactly the sort of thing they deal with day in day out, and it can be very easily "regularised". They may then ask you to do things slightly more formally next year or they may just carry on picking up the pieces as part of what you pay them to do for you at year end.

you have not evaded any tax as it is not due yet, so no need to be melodramatic

booksurr

Dazed_and_confused wrote: »

We are all trying to help the op, my concern was that the following part of booksurr's post could be misinterpreted,

Any dividend in excess of 16k (and with no other income at all for that person) would be taxed at 7.5% up to the ceiling of the basic rate tax bracket ie. £32,000

And I think example 6 darksparkle has posted shows that to be the case. If we take example of £11000 directors salary and dividend of £40000 then the tax position in 2016:17 would surely be

Salary £11000 - no tax, covered by personal allowance
Dividends £40000
5000 x 0% (dividend allowance/rate band)
27000 x 7.5% (normal dividend rate)
8000 x 32.5% (higher dividend rate)

How would you calculate the tax for 2016:17?

yes, you are right.

the 5k of div would count as income against the basic rate tax band given the salary has used up the personal allowance, thus leaving 27k remaining of the 32k basic rate band

hence I said anything over 16k (ie 11+5!) would be taxed at the basic rate up to the 32k threshold given OP's scenario did not include any non dividend income

case 1: zero salary 40k dividends:
11k tax free, 5k dividend tax free 40-11-5 = 24k taxable
24k is less than the 32k basic rate threshold so basic rate divi tax @7.5% applies to the 24k

case 2
11k salary, 40k dividends
11k salary absorbs 11k allowance,
dividend taxed as (5 x 0%) + (32 - 5 = 27 x 7.5%) + (40-5-27 = 8 x 32.5%)

Dazed_and_confused

Thanks booksurr, I think the possible confusion, in the context of this thread, was that someone may have thought you could have the 5000 with no tax (0%) AND 32000 at 7.5%.

Will be interested in polymaff's calculation/explanation given post #21

“
I understand what you mean about dividend up to 32000 but in this (slightly unlikely ) situation wouldn't 27000 be taxed at 7.5% with 5000 taxed at 32.5%?
Originally posted by Dazed and confused
”No. Are you confusing the company's distributable £32,000 with the individual income tax payer's basic rate band £32,000?

polymaff

Dazed_and_confused wrote: »

I understand what you mean about dividend up to 32000 but in this (slightly unlikely ) situation wouldn't 27000 be taxed at 7.5% with 5000 taxed at 32.5%?

Dazed_and_confused wrote: »

We are all trying to help the op, my concern was that the following part of booksurr's post could be misinterpreted,

Any dividend in excess of 16k (and with no other income at all for that person) would be taxed at 7.5% up to the ceiling of the basic rate tax bracket ie. £32,000

D&C - you are doing what you - and others - often do on MSE, and that is responding to challenges to your own statements by just posing more and more "what about this" and "what about that" questions. In this case, banging on about the taxation of multiple classes of income.

OK - so if I've "mis-interpreted" YOU about confusion over the two £32,000s then let me now risk doing the same thing again!

Perhaps the point you were trying to make to booksurr is that the Dividend Allowance has to be extracted from the basic rate band. As far as I am aware, this is wrong. The Dividend Allowance is not an "overlap" allowance like the SRA and the PSA are, so when booksurr has allocated £11k of Personal Allowance and £5k of Dividend Allowance, there is still an in-tact basic rate band of £32k available - not £32k minus £5k.

This issue awaits sight of HMRC's own design documents to verify. HMRC didn't need to get up to Issue 16 of 2015/16's design documentation because someone just kept changing the typeface. They just couldn't resolve how they actually meant to implement new tax measures - and, some say, haven't even now - with respect to the relevant Finance Act. So how the Dividend Allowance is eventually implemented - we wait to see.