dividends "avoiding tax"

Jetsygankova
Jetsygankova Just JoinedRegistered Posts: 1
Hello to all, I'm new here. I don't know where to post it. Please, I nee an advise.

My husband going to get his Dividends shares in his company. It could be very good opportunity to get a new home as young family (Deposit).

His salary paid through PAYE monthly, and this already 40% tax payable.

If you can give any advise how we can be able to get those dividends and don't pay 40%-50% on it, pay less, or pay next few years?

Ideas or thought please.

It is very important for us as option to have a home..:crying:

Regards,

Milli.

Comments

  • ExcelAnt
    ExcelAnt Feels At Home Registered Posts: 80
    Is this his own business?

    If so you need a new accountant as it is far more tax efficient to take less in salary.

    He will still end up paying around 40%, but by using dividends saves paying NI.

    There is no avoiding tax, that is illegal. But you can utilisise tax laws to be beneficial. Seek a proper accountant it's worth paying for comprehensive advice

    For the dividends he will need to complete a self assessment tax return for 12/13 tax year ending april 5th, payable by 31st january next year.

    Hope this helps.
  • reader
    reader Experienced Mentor MAAT, AAT Licensed Accountant Posts: 1,042
    ExcelAnt wrote: »
    Is this his own business?

    There is no avoiding tax, that is illegal. But you can utilisise tax laws to be beneficial. Seek a proper accountant it's worth paying for comprehensive advice

    Hope this helps.

    ISA's are a good example of tax avoidance (which is legal). Tax evasion is illegal.
  • reader
    reader Experienced Mentor MAAT, AAT Licensed Accountant Posts: 1,042

    If you can give any advise how we can be able to get those dividends and don't pay 40%-50% on it, pay less, or pay next few years?

    Milli.

    If he's a higher rate tax payer, the dividends will get taxed at 32.5% less the 10% tax credit, i.e. gross dividends in the higher rate tax bracket will get taxed at a marginal rate of 22.5% (32.5% - 10%), which increases to 32.5% in the additional rate tax bracket (42.5% - 10%).

    Therefore he should expect to lose around a quarter of the cash dividends received (because of income tax) if he's a higher rate payer.

    In addition, please consider the high income child benefit tax charge as well, i.e. if one parent's income is above £50,000 there will be an additional tax charge (i.e. effectively repaying the child benefit that you receive).
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