Re:UK middle classes 'struggling despite incomes of up to £6...
by AndrewDucker on Tuesday February 20, 2024 @08:11AM
(#39440764)
I'm a little confused. If you're paying dividends then you have to pay a tax on the company profits first, which is going to be 19%.
So if the company declares a profit of 60k then it'll pay 11,400 in corporation tax, and then 20% on the remaining £48,600, for another £9,720. Total tax of £21,120. (There's a 1k allowance now for dividends, but it basically makes no difference here).
If you just paid tax& NI on that £60k you'd have total deductions of £16,417 [1], because there are significant allowances for income tax/NI.
So you'd definitely be better off just paying PAYE.
There is a gain if you can split the payments between two of you and pay you both as PAYE.
So if the company declares a profit of 60k then it'll pay 11,400 in corporation tax, and then 20% on the remaining £48,600, for another £9,720. Total tax of £21,120. (There's a 1k allowance now for dividends, but it basically makes no difference here).
If you just paid tax& NI on that £60k you'd have total deductions of £16,417 [1], because there are significant allowances for income tax/NI.
So you'd definitely be better off just paying PAYE.
There is a gain if you can split the payments between two of you and pay you both as PAYE.
[1] see https://listentotaxman.com/index.php?year=2023&taxregion=uk&...