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We have been asked by a number of clients what the financial impact of the dividend tax will be on their personal tax bill.
We have therefore pulled together a quick calculator that shows the tax charges for different dividend levels. This calculator assumes that the director draws a salary of £8,060 from their business as has no other sources of income such as interest or property rental income.
You can see that the tax charges start to get high once you get to £40k plus. This is due to the fact that the once your income exceeds £43k, the higher rate band, then you start to pay 32.5% on your dividends in the higher tax band.
If you would like to discuss this in more details plus drop us an email and we will look at this for you.
Also, it would appear that HMRC, in their wisdom, are sending out tax code notices to some people where they are estimating their dividends for 16-17 based on previous years and adjusting their tax codes to take some of this tax at source.
This can cause problems with your salary and understanding your tax position, so if it has affected you, if you wish, we can call HMRC to ask them if they will adjust your tax code to remove any estimated tax on your dividends as you will account for this through your personal tax return for 16/17.