Tax efficient way of taking dividends from company

mjackman76

Hi folks hoping someone may be able to help. Am a director of 3 years and am looking to take funds from our business in the form of dividends (I get paid a salary month to month). I know the cap is 2k per year before I have to start paying tax on dividends and so as a basic rate tax payer ill be paying 7.5% on the dividends (as weve already taken 2k this year) if I were to recieve the funds directly. My question is - is there a way I can reduce this (legally), for example would it be possible to have the funds paid into a cash ISA in my name and would this mean that I would pay less / no tax? Any hints or suggestions would be greatly appreciated.

csgohan4

Putting dividends into ISA directly does not confer any tax benefit on the way in, only taxfree on the way out.  

Contributing to a pension either directly, with or without salary sacrifice,  or via the company directly confers tax benefits. 

Article sums it up:
https://www.limitedcompanyhelp.com/paying-into-a-pension-from-your-limited-company/

Grumpy_chap

Has the OP used their full personal allowance?

mjackman76

Thanks csgohan4 for the info, and yes Grumpy_chap I have taken 2k in dividends already this financial year.

Jeremy535897

If you are married you could consider transferring some shares to your spouse, so dividends are split between you. There are of course various other consequences of doing this.