Day: October 2, 2011

Salary v’s Dividend – how much money could I save?

This has to be one of the most popular questions business owners ask their accountants, purely looking at it from a financial perspective I would recommend trying out these free calculators:

http://listentotaxman.com/index.php

This allows you to calculate the Tax and NI payable on Salaries

http://www.contractorcalculator.co.uk/Dividend_Tax_Summary.aspx?uid=0&logon=False&psalary=50000&div=1&status=OutsideIR35&pyt=LimitedCompany&expenses=3000&other=0&pension=0&tc=747L&age=30&salary=12000&rate=25&rt=Hourly&rt2=Hourly&weeks=44&dwpw=5&dwpw2=5&hours=37.5&dni=3000&tty=2011&rate2=25&weeks2=44&hours2=37.5&status2=OutsideIR35&psalary2=50000&mir=0.05&ma=200000&mp=25&cid=0&vat=1&vi=False&cby=1&ar=1&gs1=0&gs2=0&gs3=0&gs4=0&nd=80000&pbt=1&dpo=16-Jul-2011&dop=01-Jan-0001&inv=1&hpd=11&me=150&vt=Car&mpw=0&mpc=0&pt=Monthly&ace=500&mt=Parasol&wl=InsideLondon&uds=Basic&Host=LOCAL

This link calculates the tax on dividends (Dividends are paid after the company has paid Corporation Tax which is 21% for small companies)

steve@bicknells.net

 

 

Can I make a suggestion? £5000 tax free

In the current economic climate every business needs to look for new ways to improve but few businesses take advantage of the HMRC approved schemes

http://www.hmrc.gov.uk/paye/exb/a-z/s/suggestion-schemes.htm

Basically there are 2 types of award:

Encouragement Awards where the employer can pay £25 tax and NI free

Financial Benefit Awards where employees can be paid up to £5000 tax and NI free

Financial benefit awards are exempt from tax and NICs up to the greater of the following, subject to an overall limit of £5,000:

  • 50 per cent of the financial benefit you reasonably expect the suggestion to lead to in the first year following its adoption
  • 10 per cent of the financial benefit you reasonably expect in the first five years following adoption

Sounds like a win win to me

steve@bicknells.net