Paye

Kinhh

Hi there
As a director, can I pay myself £12,570 a year and £3,000 dividend and only pay tax/paye on the 3k? at around 7%. Many thanks, Amy

marcia_

Kinhh said:

Hi there
As a director, can I pay myself £12,570 a year and £3,000 dividend and only pay tax/paye on the 3k? at around 7%. Many thanks, Amy

 You need an accountant

uknick

And at least 19% corporation tax on your company profits, which you must make before you can legally pay yourself a dividend.

mlz1413

This is an example on HMRC website.  But you must be a limited company and that means financial statements filed in a specific and legal format.  Plus ensuring Companies House is up to date annually.

I really recommend you get an accountant. 

Example

You get £3,000 in dividends and earn £29,570 in wages in the 2024 to 2025 tax year.  

This gives you a total income of £32,570.  

You have a Personal Allowance of £12,570. Take this off your total income to leave a taxable income of £20,000.  

This is in the basic rate tax band, so you would pay:  

20% tax on £17,000 of wages  

no tax on £500 of dividends, because of the dividend allowance

8.75% tax on £2,500 of dividends

singhini

Kinhh said:

Hi there
As a director, can I pay myself £12,570 a year and £3,000 dividend and only pay tax/paye on the 3k? at around 7%. Many thanks, Amy

I think its alot more complicated than this.
Which tax year are you referring to 2024/2025 or 2025/2026 or something else?  ------> it might make a difference.
Also it depends if you are just a director or also an employee.
There are things like Corporation tax to consider aswell as possibly Employers NI 

If we assume your both a director and an employee, and we assume your profits are £15,570 (£12,570 + £3,000).
Then yes you can pay yourself £12,570 and pay no Income Tax of NI on the £12,570  as an employee  BUT the business (who is your employer) would still pay Employers NI of

13.8% on anything above £9,100  (Tax year 2024/2025)
15% on anything above £5,000 (Tax year 2025/2026)

You still need to pay Corporation tax of 19% on anything above the  £12,570 (so that's 19% on £3,000)
And you need to pay Dividend tax of 8.75% on anything above £500 (so that's 8.75% on £2,500)

Also there will probably be pension contributions to take into consideration (both employee and employer) which  haven't yet been taken into consideration yet.

PS - ive never been a director and the above info i put together from surfing the internet and so could be completely wrong. You have been warned -----> this info is not reliable!

As mentioned already, you need to speak to an accountant.

Kinhh

I really appreciate everyone who responded, thank you so much.