Dividend or bonus

Are my calculations correct?

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Profits of £100k to pay out to shareholder. Assume shareholder already into 45% tax (and 2% NI) bracket - and has used 0% dividend band. My calculations result in net salary of £46,573 or net dividend of £50,139. Intuitively, the saving is much greater than expected. I hate the phrase, but am I missing something?

Thank you, Portia. To the others, with apologies for the misleading words in the sub-heading, I wasn't specifically asking anyone to check my workings - I would have included them were that the case. I had hoped that you would - as Portia did - find the time to carry out your own calculations and see if the result was different (which it wasn't).

Replies (10)

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RLI
By lionofludesch
24th Jan 2018 10:45

Difficult to say without seeing your workings.

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Replying to lionofludesch:
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By Tax Dragon
24th Jan 2018 11:04

Q: "Are my calculations correct?"
A: "What calculations?"

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By Tim Vane
24th Jan 2018 11:02

Yes, you are missing something.

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Replying to Tim Vane:
Portia profile image
By Portia Nina Levin
24th Jan 2018 11:13

Do share?

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Replying to Portia Nina Levin:
By Tim Vane
24th Jan 2018 11:18

Quote:

Do share?

A name.

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Portia profile image
By Portia Nina Levin
24th Jan 2018 11:13

Net salary £46,573 or net dividend of £50,139 by my reckoning, based on the information provided, all other things being equal.

For those that struggled:
With a salary there's no CT to pay on the £100K in question if it's being paid out as a salary, so £100K/1.138 x (100% - 47%) = £46,573.

Contrast with a dividend where CT needs to be paid, so £100K x (100% - 19%) x (100% - 38.1%) = £50,139.

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Replying to Portia Nina Levin:
By Tim Vane
24th Jan 2018 11:22

Why do you think anybody would struggle? If the OP cannot be arsed to post his workings why the hell should we be arsed to check it?

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Replying to Tim Vane:
Portia profile image
By Portia Nina Levin
24th Jan 2018 11:39

Why do you need the workings? It was a straightforward enough comparison. With the workings given, the OP might have had any misunderstanding confirmed.

On the anonymity issue, personally, I'd have been quite happy ignoring the question, but I'm not going to ignore the rest of you!

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Replying to Portia Nina Levin:
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By Tax Dragon
24th Jan 2018 11:26

When did you start posting OPs anonymously?

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Replying to Tax Dragon:
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By Portia Nina Levin
24th Jan 2018 11:36

My policy is to ignore questions that are posted anonymously. I can't make others do the same, and so, once others have replied, my policy is to bait them

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