Salary V Dividends App Calculator
I wrote this to provide an update on the dividend verses salary calculator within your Platinum App.
As you know the App has been updated twice this year due to the double budget along with regular updates in technology and improvements.
One of the changes announced during the second budget related to dividend payments.
As many of you know from 6th April 2016 new rules come into force for the taxation of dividends. The first £5000 is tax free, but sums above that will be taxed at 7.5% for basic rate taxpayers, 32.5% for higher rate taxpayers and 38.1% for additional rate taxpayers.
For a basic rate taxpayer using up their basic rate bands with a small salary and the balance in dividends from their company, this will erode approximately £2000 from the benefit shown by the calculator for 2015/16 figures. The benefit erosion is approximately £8000 for someone paid just under the additional rate tax level of £100k, although in our view it will usually still remain beneficial to choose dividends over salary.
In view of the forward planning element of dividends versus salary it is proposed to replace the calculator with one working on 2016/17 tax bands and allowances after the Autumn Statement, assuming NI bands for 2016/17 are available then.
If you have any questions, comments of would like to chat about any area of your App please don’t hesitate to call or email me.
Gillian Harris | Head of Customer Care | MyFirmsApp | firstname.lastname@example.org