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Salary and Dividend - How to calculate tax

Salary and Dividend - How to calculate tax

 Hi All

I am confused as to how I could calculate the tax if someone is paid both salaries and tax. Can someone suggest a calculator or template I could use. I have  3 scenarios,

1. Pay £10k salary, and £30k dividend

2. Pay £15k Salary, £45k dividend

3. Pay just £30k dividend - no Salaries.

How can i calculate tax and NI for these scenarios?

Also can someone confirm that the director can withdraw all the profits as dividends? Basically we have a contractor who would like to start a company and draw all the profits as dividends rather than going on our payroll. it's consultancy so there are no cost for him. Is it possible?

Your help would be much appreciated. Thanks 


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By Tosie
02nd Feb 2010 10:21


PTP has such a calculator. The main problem is the 40% band and the contractor paye regime (old IR35)



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By Anonymous
02nd Feb 2010 10:25

First things first

You need to engage a qualified (ie one who has the expertise, not necessarily professional qualifications) tax adviser to help you.

Someone else can help with the tax calculations, which in all honesty are very straightforward.

As far as your other point is concerned, there are issues here that do require the input of an adviser. Yes, a director may draw all profits as dividends, providing he is the sole shareholder. But, and it's a huge but, you indicate that he is planning to set up his own company rather than go on your own payroll. You (strictly speaking, he, as it his problem) should seek advice on 'IR35' which may well apply here - negating the benefits of drawing dividends (though it would benefit your company in eliminating a liability to employer's NI).


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02nd Feb 2010 10:37

Thank you

 Thanks guys

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02nd Feb 2010 20:47

Tax Planners

2020 Tax Tips and Tools has such a calculator - and 99 others! 





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