Choice between Dividends and Director's Loan

Work out the figure for the amount of  annual cost of ers NIC and dividend to fund the income tax

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I was reading an article from an accountant website on choice between Dividends and Director's Loan. There was a table illustrating this point. However , I am not sure how they worked out the figure for the amount of  annual cost of ers NIC and dividend to fund the income tax. Please see the table link below:

https://www.pricebailey.co.uk/wp-content/uploads/2017/08/table2.jpg

 

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By frankfx
13th May 2020 12:09

What are your workings ?
What difference do your workings reveal?

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Replying to frankfx:
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By sach36
13th May 2020 13:35

Hi frankfx ,

I could only think that the ers NIC would be on BIK -Loan Interest of £10,000*3%*13.8%=£41.40. I am not quite sure about annual cost of Dividends. This is for BR band taxpayer.

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paddle steamer
By DJKL
13th May 2020 14:39

Why are they using 3% anyway, for 2020/2021 the rate is surely 2.25%?

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Replying to DJKL:
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By sach36
13th May 2020 16:19

Hi DJKL,

The article is written in August 2017 and so the Loan interest BIK is 3% then.

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By SteveHa
13th May 2020 15:00

I can't be bothered doing the maths, but if the employer is standing the personal tax then that of itself is a benefit in kind, grossed up for tax and NI.

EDIT: Oh, and what DJKL said.

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