Tax/wages/dividend

baker6743

Hi
I'm setting up a new business am I right in thinking, 
If I take 14k pa in wages
12k in dividends 
I would pay roughly 1.5k in tax and NI and help would be appreciated. 

Grumpy_chap

It needs to be Ltd Co to do that and, making assumptions that there is nothing other than the very basic situation (England, no student loan, etc).
On £14k wages, you'll pay around £300 income tax plus £200 NI
On £12k dividend, you'll pay around £750k income tax (7.5% of £10k as £2k is covered by the dividend allowance).
The £12k dividend has to come from retained profits after corporation tax 19% (£2.8k) is paid on £14.8k

All in, that's £2.8k corporation tax plus £1,050 income tax plus £200 NI.

baker6743

Would you say the below is incorrect then?

Jeremy535897

Those figures include the increase in NI on salaries and dividends that Liz Truss has said she will reverse. The better option, given the additional cost of employer's NIC on the salary, is to keep the salary below the secondary earnings threshold of £9,100 and take the rest as dividends.