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Where Taxpayers and Advisers Meet

Calculating maximum net dividend for 2015/16

Jetsetter4805
Posts: 22
Joined: Wed Mar 09, 2011 6:37 pm

Calculating maximum net dividend for 2015/16

Postby Jetsetter4805 » Wed Mar 09, 2016 4:34 pm

Could someone please clarify the maximum dividend (up to the 40% income tax bracket) I can pay myself in 2015/16? I received no salary in the UK and have around £3000 gross bank interest received.

Am I right in thinking the net dividend I can pay myself is 10,600+28607-3000 = £36,207?

Many thanks!

maths
Posts: 7578
Joined: Wed Aug 06, 2008 3:25 pm

Re: Calculating maximum net dividend for 2015/16

Postby maths » Wed Mar 09, 2016 7:49 pm

Looks good to me!

However, others are more competent than me re income tax calculations.

Jetsetter4805
Posts: 22
Joined: Wed Mar 09, 2011 6:37 pm

Re: Calculating maximum net dividend for 2015/16

Postby Jetsetter4805 » Thu Mar 10, 2016 2:25 pm

Thank you Sir. I hope you are well.

RMC
Posts: 431
Joined: Wed Aug 06, 2008 3:35 pm

Re: Calculating maximum net dividend for 2015/16

Postby RMC » Wed Mar 16, 2016 1:47 pm

(PA+BRB-(gross interest))*0.9 = £33,647
However, I’d recommend that your company pays you, before 6.4.2016, a minimum salary bearing free Class 1 NIC, to build up your NI record. Getting an accountant to do the RTI reporting need not be costly!

maths
Posts: 7578
Joined: Wed Aug 06, 2008 3:25 pm

Re: Calculating maximum net dividend for 2015/16

Postby maths » Wed Mar 16, 2016 6:32 pm

RMC

Shouldn't it be £35,447?

(I'm working on PA 10,600 and Basic rate band £31,785).

LozaACCS
Posts: 1504
Joined: Wed Aug 06, 2008 3:55 pm

Re: Calculating maximum net dividend for 2015/16

Postby LozaACCS » Wed Mar 16, 2016 9:58 pm

It is the franked amount which does not exceed the BR band after deducting the remaining PA, so 31,785 + 7600 (10,600 - 3000) = 39,385 * 90% = £35,447 as maths stated

Jetsetter4805
Posts: 22
Joined: Wed Mar 09, 2011 6:37 pm

Re: Calculating maximum net dividend for 2015/16

Postby Jetsetter4805 » Thu Mar 17, 2016 10:44 am

(PA+BRB-(gross interest))*0.9 = £33,647
However, I’d recommend that your company pays you, before 6.4.2016, a minimum salary bearing free Class 1 NIC, to build up your NI record. Getting an accountant to do the RTI reporting need not be costly!
While I operate through a UK limited company, I'm not actually resident in the UK and the work is performed outside of the UK. I use a third party payroll provider to process local payroll taxes in the country where the work is performed and supplement this with dividend.

Thanks to all for the feedback.

LozaACCS
Posts: 1504
Joined: Wed Aug 06, 2008 3:55 pm

Re: Calculating maximum net dividend for 2015/16

Postby LozaACCS » Thu Mar 17, 2016 9:16 pm

That adds another dimension.
If the salary is not taxable in the UK (this could create another debate) then your liability to UK IT is restricted under S811 ITA 2007 to the tax on disregarded income (interest and dividends are disregarded income), so if you do not claim a PA then no liability arises on the interest notwithstanding that it is paid gross.
If you claim a PA then all of your income becomes taxable and is reduced by the PA, in which case a liability might arise on the interest.


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