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Where Taxpayers and Advisers Meet

Income tax and dividend calculation for 2016/17

spriggo
Posts:1
Joined:Thu Jun 22, 2017 5:29 pm
Income tax and dividend calculation for 2016/17

Postby spriggo » Thu Jun 22, 2017 5:33 pm

Hi all,

First time poster.

I'm self employed and my earnings are a mixture of salary and dividend. I'm trying to work out my tax bill for 2016/17.

Here’s my earnings for the tax year 2016/17:

Salary: £11,000
Dividend: £34,353
Total income: £45,353

Now I know the salary part of my earnings has incured roughly £350 in NIC's etc which have already been paid. Therefore it's the dividend part I'm trying to work out.

Here's my calculation:

First £5,000 at 0% = £0.00
Next £27,000 at 7.5% = £2025.00
Remaining £2,353 at 32.5% = £764.72

Total Dividend Tax: £2789.72

I also pay student loan (plan 1), which I’ve calculated below.

Student loan contribution (threshold for 16/17 is £17,495)

£45,353 - £17,495 = £27,858
9% of £27,858 = £2,507.22

£2,789.72 + £2,507.22 = £5,296.94

Could you tell me if that’s correct, as a figure I had in my head previously was closer to £8000?

Thanks in advance.

robbob
Posts:3228
Joined:Wed Aug 06, 2008 4:01 pm

Re: Income tax and dividend calculation for 2016/17

Postby robbob » Fri Jun 23, 2017 10:33 am

those figures look correct

D&C
Posts:61
Joined:Thu Dec 22, 2016 10:04 pm

Re: Income tax and dividend calculation for 2016/17

Postby D&C » Sat Jun 24, 2017 12:31 pm

They might look correct from the income details provided but what about the op's self employment income which isn't mentioned when he moves into his earnings?

Was there a loss which could be offset, or has a profit been forgotten or was there no profit/no loss??


Or is the op confused and isn't actually self employed at all but a company director? Could well be but then if he/she is a director what's with the excessive salary of £11k rather than the standard £8k+????

robbob
Posts:3228
Joined:Wed Aug 06, 2008 4:01 pm

Re: Income tax and dividend calculation for 2016/17

Postby robbob » Sun Jun 25, 2017 6:34 pm

D&C
what's with the excessive salary of £11k rather than the standard £8k+????
I wouldn't say 11k is always a materially more inefficient salary level than 8k for 16/17 calcs - if for example the OP's company qualified for the Employers allowance (and had some leftover) then the extra salary reduces corporation tax at 20% - whilst only costing 12% in ees NI.


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