I am trying to determine the tax rate on extra dividend once someone is losing their PA eg if director is already receiving £90,000 dividends
I can easily explain that dividends are taxed at a gross rate of 32.5%, and they come with a 10% tax credit.
But once the PA is withdrawn the tax rate varies according to the level of the divi.
Ie when £10 is declared 60p is payable.
when £100 is declared £44.35 is payable
when £1,000 is declared £481.85 is payable.
If he has salary of £90,000 the same amount of dividend gives £4.47, £46.97, and £471.97.
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Are you sure your numbers are right?
With net dividends of £90,000, your gross income is £100,000. There is no tax on the first £41,450 (2013/14), and the tax at 32.5% with 10% tax credit on the remaining £58,550 is £13,173.75.
With net dividends of £90,009, your gross income is £100,010. There is no tax on the first £41,445, and the 22.5% further tax on the remaining £58,565 is £13,177.13. That is an increase of £3.38 or 33.75p per £1 of gross dividend. It is 37.5p per £1 of net dividend (25p x 1.5).
With net dividends of £90,090, your gross income is £100,100. There is no tax on the first £41,400, and the 22.5% further tax on the remaining £58,700 is £13,207.50. That is an increase (over the £90,000 dividend level) of £33.75 or 33.75p per £1 of gross dividend. It is 37.5p per 31 of net dividend (25p x 1.5).
With net dividends of £90,900...
If you do the same thing with a salary, you need to start with a salary of £100,000.