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Hello, I am one of the experts on Just Answer and pleased to be able to help you with your question.
If you buy through a corporate structure then the net income will be subject to Corporation Tax (CT) at 19%. However, there is no Personal Allowance (PA) available by this route. Any income you receive from the company would have to be made through PAYE channels with Income Tax (IT) and possibly national Insurance (NI) contributions deducted.
I do hope that you have found my reply of some assistance.
You have sussed it out to a 'T' to use an old expression. The Government has announced a reduction to 17% in April 2020. Remember that dividend income over the 2K in any one tax year will be grossed up to your marginal rate of taxation.
I am a diabetic and have just taken my insulin so I must eat. I will be back within the hour with a reply.
There are no bandings for dividend taxation.
Dividends do not attract NI Contributions.
If you are paid by the company then NI is:
£162 to £892 a week (£702 to £3,863 a month) - 12%
Over £892 a week (£3,863 a month) - 2%
In your case, yes.
2863 a month after which the contribution is at 2%.
The company deducts this from your emoluments along with Income Tax.
The 2% applies to income over 2863 per month.
Dividend payments do not attract NI contributions.
Yes, it is.
Indeed it is. Remember that dividends do not count against the company in the Corporation Tax computation.
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That is the Income Tax route. Where a company pays a dividend that must be from free cash and is not included in the calculation of the Corporation Tax position.
Dividends do not have any effect on Corporation Tax liability whatsoever and can only be paid from free funds in the company's hands ie after all charges have been dettled.
Delighted to have been of assistance, Brian.
Thank you for your support.