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DIVIDEND VS SALARY EXPLAINED! (UK)
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- Опубликовано: 24 апр 2021
- Wondering whether it’s best to pay yourself salary or dividend? In this video Dan runs you through the key information you need to know.
Topics include:
Should I pay myself dividends or salary
Best salary 2021
Best salary 21/22
Dividend Tax Rates
What is best salary or dividends
How dividends work
What are dividends
What is salary
Directors salary basics
How salary affects corporation tax
How directors national insurance works
Dividend basics
Income tax rates UK
… and more!
Useful blog on employment allowance mentioned: www.heelanasso...
You can see more about what we get up to on the following:
LinkedIn (Dan): / danheelan
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Podcast: heelanhub.co.uk The HeelanHub Podcast, a show for small business owners.
Join our mailing list for tax tips at: www.heelanassociates.co.uk
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Web: www.heelanasso...
Call: 02392 240040 Email: info@heelanassociates.co.uk
#accounting #ltdcompany #tax #director
Thanks for the video mate. I'm tempted to go for a mix of salary/dividends with our new brand launching this year. Great advice
Glad it was helpful! Best of luck with the launch!
First time I've ever understood this! Thank you :)
Glad it helped make sense!
what about the non-residents? We don't need national insurance for example, do we have to pay it? do we have personal allowance?
regardless, can the company not pay anything and keep the money there? If I only earn money in a single month and the rest have 0 income, how does it work?
This one is probably a short series of videos to explain I’m afraid! There are too many variables to explain how it might work in a comment sorry! You have to consider the tax residency of both company and director/ shareholder and it all interacts differently.
@@HeelanAssociates oh, if you could make a video about itz that'd be amazing, I've been sesrching online for day with little to no answers about the topic
Hi Dan. Thanks for the video. I got slightly confused with all the percentages. For the info graphic you showed at the end showcasing the different tax scenarios for the £40k income. Can you explain the breakdown of the tax percentages please? - i.e. Salary only 29%?, Dividend only 22%?, Mix 18%?
Its been a while since we did this video so had to remind myself.... but that's the total tax bill as a % of £40,000.
So example, although basic rate tax is 20%, and NI at the time of recording was 12% (so 32%), you have thrown in the mix personal allowances and thresholds where you don't pay tax. This means your overall tax rate is lower than this.
Great video thanks- couldnt wrap my head around why the there was no corp tax when taking a max salary until you said it was an allowable deduction
Glad it helped!
Great video. Does the individual pay the tax on their dividends during their self assessment or is it paid by the company?
It’s personal tax so the individual. We done lots of video on dividend, have a check on the playlist should help some more.
You dont have to pay nat insurance. Its voluntary contributions.
If only ;)
Hi, Do shareholder's pay dividend tax individually or is dividend tax taken as a total over the tax year? So would 2 shareholders be able to take 37k at 8.7% each or is it 74k at the higher rate of 33.7%?
It’s taken over the tax year, and total bill is paid individually, at whatever the applicable rate is to them.
For example you might have one shareholder with no income at all, so could take say ~50£k at the ‘cheap’ rate, where as another shareholder already earning £60k in another job, they are likely (dividend allowance aside) to pay the higher rate on every penny.
Hi Sir,
I have part time job as a staff nurse in NHS hospital. I do agency in other hospitals approx 2 days a week and get paid as PAYE via Umbrella Company. I want to change to do limited company. I have some doubts
1) Will I qualify as a limited company while working as permanent NHS staff?
2) Is there different laws for northern Ireland
3) I make around £800 per week before tax, how much would it cost approximately for accountancy.
Thanks in advance
Hi,
Sadly these are too difficult to cover in a comment, but some general thoughts
1) You'd have to consider employment status issues (sometimes the tax issues are referred to as 'IR35' considerations)
2) Tax wise it's part of UK
3) Accountancy costs usually aren't linked to income, it's linked to the work required for the company. This may help: ruclips.net/video/C4K0MiOsIrU/видео.html
Great video. How much take home pay will I get if my company makes £240k profits per annum? I'd be taking a mix a salary and dividend as the sole owner.
Bit of a long one to answer in a comment, but lets the answer is 'vastly more than if you did this all through PAYE salary' :- )
So much depends on your situation, whether you'd need to take all at once, whether you could split the salary, whether you wanted to contribute to pension etc.
Do you need a national insurance number if you only take dividends from a uk company?
NI numbers are really related to dividends, but you may need an NI number to register for self assessment, which is needed to declare the tax.
Can you remain a sole trader and have a ltd business as well?
Yes! Quite normal if for example you have a tiny trade and a completely different business that’s a LTD.
If you are employed FT on around £40k PAYE what tax and NI would you pay on any salary payed by your Ltd company is it just cumulative
Do you mean if you had a side business that was a LTD and you wanted to pay yourself from there?
@@HeelanAssociates yes thats right
@@brickers911 Then in that case you probably wouldn't pay salary from your limited, you'd probably just pay dividends. First £2000 would be tax free, rest at either 7.5% or 32.5 depending how much below ~£50k, and how much between ~£50k - £150k
Check out this vid: ruclips.net/video/VATU3Q7p-7E/видео.html
@@HeelanAssociates That brilliant, great videos BTW
Thanks for these amazing videos, Are investments in the business classed as profits? So if I were to get SEIS investment, can I use a dividend structure?
Could you expand on this a little more? Glad you enjoyed the vids!
@@HeelanAssociates thanks for the reply, I meant if I were to recieve £150,000 for example in seed funding, would I be able to pay this to myself through dividends? Or would you have had to pay tax on it first?
Hi thanks for this video. Me and my wife are equal shareholder in my pvt ltd company. In this case do we both receive equal dividend or can I pay her more dividend than myself?
If you have the same ‘class’ of shareholding you have to pay in proportion to holding (usually). It is possible to create other classes to pay dividends in different proportions (ie you can declare different amounts for different classes).
Thanks
Would my accountant take care of all this if i had my own company?
If they are decent yes. Accountants vary wildly on how they support with this, but most decent ones should provide at least a basic opinion on how you should best pay yourself tax efficiently!
the first £2000 of dividends is taxed at 0% actually, your editing of the video has lead to this inaccuracy
We generalise a lot in these videos, it helps most people to understand easier. Technically yes, you are 100% correct.
Does anyone know if i can put money back into my personal account from my business account if i only put it in there temporarily as i didn't have enough money to buy tools with now i do have enough money in my business account can i just pit it back without it being dividends?
If we are talking limited companies, yes generally.
This might help, you've effectively created a Directors Loan: ruclips.net/video/lfSFyrRzzXw/видео.html