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bigduckontax
bigduckontax, Accountant
Category: Tax
Satisfied Customers: 6630
Experience:  FCCA FCMA CGMA ACIS
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I was wondering if you can help me with the following, No,

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Hello, I was wondering if you can help me with the following
JA: Have you talked to a tax professional about this?
Customer: No
JA: Anything else you want the Accountant to know before I connect you?
Customer: No thank you

Hi. My name is*****'m looking at your question now and will post my answer or ask for more information here in a short while.

Can you tell me what the question is please.

Customer: replied 3 days ago.
I was offered a job under 1 year contract (maternity cover) employee, however I am a director of an LTD company as well, so I was wondering if I would pay less tax if they hire my company instead (I would pay myself a salary+dividends) then to get employed personally with them

I'll have to leave that to another expert I'm afraid.

Customer: replied 3 days ago.
ok thank you

Hello, I am one of the experts on Just Answer and pleased to be able to help you with your question.

It does not matter which way your remuneration is paid. However, if you do it through your limited company you will have all the palaver of operating PAYE yourself.

Customer: replied 3 days ago.
Thank you. But being able to pay myself a non-taxable salary of around 8k and the rest in dividends, am I not getting more take-home pay?

Nothing in it providing the whole total does not exceed your personal allowance.

Customer: replied 3 days ago.
it does exceed personal allowance. Say the salary is 40k, that means take-home pay after NI and tax is around 30k, but I pay myself as a director through my company a salary of 8k and the rest in dividends, the tax I need to pay on dividends is around 2k. Or am I mistaken?

Only the first 1K of dividends is tax free, the rest are taxed at your marginal rate, 20%.

Customer: replied 3 days ago.
you're saying that 40k would be taxed the same way through an employer and through my LTD? The take-home pay would be the same?

When it all cme out in the wash on self assessment, yes.

bigduckontax, Accountant
Category: Tax
Satisfied Customers: 6630
Experience: FCCA FCMA CGMA ACIS
bigduckontax and other Tax Specialists are ready to help you

Thank you for your support.

Customer: replied 3 days ago.
sorry but i do have a follow up question-- I just read on HRMC that tax on dividends up to 34,500 is 7.5% not 20% as you mentioned?

Yes, but in the end they will be grossed up for tax so in the end its a lemon

.

Customer: replied 3 days ago.
For self assessment, right. But not until next year. So it's basically more money now but in the end I will have to pay the same?

Correct, always bear in mind Benjamin Franklin's quip that in life there are but two certainties, death and taxes!

Customer: replied 3 days ago.
Haha, but why pay now when you can pay later!? :) Thank you again!

I agree, I never would.