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Maximising your 5th April 2019 tax allowances

As we are now in the new tax year it is a good time to review the optimum tax strategy for 18/19, and what dividends you can take, before incurring higher rate tax.

Based on you taking a salary of £702 per month (£8,424 total for the year) from your limited company, you can take an additional £37,926 dividends for the year before higher rate tax is charged*.

This works out at approximately £3,160 of dividends per month, though please ensure the company has sufficient profit to pay this level of dividends.. You can refer to the ‘Dividends Available’ figure on the dashboard of your portal or check with your accountant.

This will bring you up to the higher rate tax limit and give you a tax liability of £2,437.50 due by 31st January 2019. As the payment due is over £1,000, a payment on account will also be required, less any payments on account that you have made in previous years.

*If you anticipate any additional personal income such as rental property, interest, dividends from shares, benefit in kind or any other taxable income, please update your portal and provide the additional to your accountant and they will advise.

As a general guide (and based on only the £702 per month salary) here are the anticipated levels of tax due on specific levels of dividend payments:

 

Dividend    Est Personal Tax Bill 2018/19

£10,000        £344

£20,000        £1,094

£30,000        £1,844

£37,926        £2,438

£40,000        £3,112

£50,000        £6,362

£60,000        £9,612

£70,000        £12,862

£80,000        £16,112

 

If you are a Scottish tax-payer, please click here as your income tax rates and allowances are different to the rest of the UK.Although the higher rate tax band is lower for Scottish tax-payers with respect to income tax, for the purposes of dividend taxation the higher tax band is the same as for the rest of the UK, at £46,350.

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