If I've taken £100,000 in dividends?
Answer:
The rules for tax on dividends changed several years ago - they are taxable at 32.5% to the extent that they fall in your higher rate tax band, and at 10% (which is the amount deemed deducted at source) for anything below that.
So, assuming the £100,000 figure is the actual cash amount you have drawn from the company (and not the gross dividend), and it will all be at the higher rate of tax, it works out that you need to keep back 25%, i.e. £25,000.
If you're interested, the calculation is:
Net dividend 100,000/90%=111,111 gross dividend (there is a deemed 10% tax credit i.e. 11,111, like the old ACT system, although the company no longer actually pays this tax).
111,111 x 32.5% = 36,111 tax liability
36,111 - 11,111 tax credit as above leaving 25,000 due to the taxman. Which works out at 25% of your net 100,000.
If I had the SLIGHTEST INKLING what tax jurisdiction you were in I may be in a position to help.
However if you are in the UK keep 40% (Higher Rate)
points
try these links
http://www.lofinance.blogspot.com.
Dividends are normally paid less 20% income tax so in theory your company should already have paid some tax. The company will need to let the Inland Revenue know that it has paid dividends and that it owes income tax.
As an individual, for the tax year 2006/07, you can earn £5,035 free of tax and then the next £2,150 is taxed at 10% and then the next £31,150 is taxed at 22% and the remaining is taxed at 40% with no upper limit. Once you have worked out how much tax is due you can then deduct the income tax already paid eg
£100,000 x 100/80 = £125,000 paid gross
this means £100,000 paid as dividend and £25,000 paid as 20% income tax by the company.
Therefore received by you = £125,000
Tax due is:
£5,035 x 0 = 0.00
£2,150 x 10% = £215
£31,150 x 20% = £6,230 (20% because it is counted as investment income and not earned income taxed at 22%)
£86,665 x 40% = £34,666
Total tax due = £41,111 less £25,000 already paid by company = £16,111 due to the Inland Revenue.
This is a rough guide assuming you have no other income.
My advise would be to see an accountant - one that is qualified by one of the accounting associations such as AAT, ACCA, CIMA, ICAEW.
Talk to an accountant.
If it's a small limited company then there are all sorts of stealth taxes that GB has introduced over the last few budgets.
The answers post by the user, for information only, BAnswer.com does not guarantee the right.
Other Questions and Answers: