directors dividend

[yearplanner]

Hi
if a director, 100% shareholder, takes a dividend of £150,000 in April 2006, it will be the only source of income in that tax year.
what will be the total tax payable?
thanks
yearplanner

[Instinctive]

The exact figure will depend on whether it is taken before or after 5 April 2006 and whether the £150,000 figure is net or gross dividend.

Assuming before 5 April 2006, ie during the current tax year 2005-06, and the £150,000 is the gross dividend, tax will be as follows:

4,895 at 0% = 0 Personal Allowance
2,090 at 10% = 209 Starting Rate
30,310 at 20% = 6,062 Basic Dividend Rate
112,705 at 32.5% = 36,630 Higher Rate

150,000 = 42,901 TOTAL

Of this, £15,000 will be deducted at source by the company, leaving £27,901 to Pay via self assessment.

Ramnik

[deanshepherd]

Couple of modifications:

Basic dividend rate is 10% not 20%. I would also assume £150k is the net dividend received.

Additional tax payable will therefore be just under £25k.

(Payments on account will also need to be considered).


Dean Shepherd
dean.shepherd@mmi-online.co.uk
MMI Accountancy
www.mmi-online.co.uk