The end of the personal tax year is now only couple of weeks away (5th April 2017).
Things to consider at this time include your overall dividend position for the year. Have you declared enough dividends to cover funds taken from the company? Are you aware of the personal tax incurred for these dividends? Should you increase your dividends to make full use of the lower rate tax thresholds?
To help you understand your dividend and personal tax position this year we’ve updated our “Personal Dividend Tax” report (accessed via the link on your dashboard).
Other (non company) Income
To ensure Tempo has the full picture of your personal income, use the new field “Other taxable income”, to record an approximation of any other taxable income you may have had this year (including rental profit, investments and PAYE income not already shown on the report). We’ll keep this figure for future reference as it will affect the tax incurred on your dividends each year.
This field is shown in yellow in the example screen shot below.
Your Dividend Tax
An estimation of dividend tax incurred is shown in red just below the “Recalculate” button. This figure is the tax on dividends only, if you have other tax to pay (such as tax on property income, student loans, child benefits etc) then these will be in addition to this figure.
Using new ”Dividend Tax Summary” report
Tax on dividends is a little more complex for the 16/17 year than it used to be. We now have a couple of new tax brackets to consider (including a £5K tax free dividend and a lower rate dividend tax of 7.5%).
A key point, if company profits allow, is to ensure you are making full use of the lower rate of dividend tax.
The new report (the bottom half of “Personal Dividend Tax” page) shows the tax thresholds and what scope (if any) you have left for dividends at each threshold.
Read the customised comments just below rates table as this will explain in clear English, the key points for you to consider.
The screen shot below shows an example of an individual who’d benefit from declaring a further £2K dividend to make full use of the lower dividend rate.
Drop us a line via our usual support channels if you’d like to discuss your dividend position; or indeed if you’d like us to ensure dividend records are up to date for the end of the tax year.