Salary dividend split

Any glaring errors?

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These new fangled rules are a minefield, I would appreciate if you could look through my calculations and see if any glaring over-sights before I send to client (2 director/shareholders). They are currently taking a net £8000 salary, I am looking at the savings of taking £4000 net salary and dividend sufficient to leave them £4000 after accruing tax to be paid on tax return.

Curent position:

 

Gross

     

13431.91

         

Tax

2666.67

20%

533.33

 
 

9833.33

40%

3933.33

 
 

931.91

45%

419.36

4886.02

         

NI

     

545.89

         
       

8000.00

         

Company NI

   

1760.32

         

Total personal tax and NI

 

5431.91

         

Cost to company £15192.23 less CT relief  £12153.78

         

Position from above proposal:

 

Salary

     

6455.43

     
               

Tax

2666.67

20%

533.33

       
 

3788.76

40%

1515.50

2048.83

     
               

NI

     

406.60

     
               
       

4000.00

     
               

Company NI

   

737.56

     
               

Dividend

416

0%

0

416

     
 

5309

32.50%

1725

3584

     
 

5725

 

1725

4000

     
               

Tax to pay on Tax Return

 

1725

     
               
               

Total personal tax and NI

 

4180.43

     
               
               

Cost to company - £12917.99 (6455.43+737.56+5725) less CT relief on salary only ((6455.43+737.56)x 20% = £1438.60) = £11479.39

 
 

Any one see any flaws, errors or omissions?So company would save £674.39 each per month and directors would save £1251.48 each per month but still end up with a net £8000
.

Replies (6)

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By Alastair Johnston
25th May 2016 11:28

That's a mighty narrow 40% band you have there.
No NIC below £8060? Employer's Allowance?
Out of date rates of tax on dividends.

Thanks (0)
Replying to Alastair Johnston:
joe
By Smokoe Joe
25th May 2016 11:33

Erm, these are monthly figures, tax rates fair enough, lifted off HMRC website, which is misleading! Will rework, thanks for that, exactly what I wanted.

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Replying to Alastair Johnston:
joe
By Smokoe Joe
25th May 2016 13:21

Oh, employers allowance taken by staff.

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joe
By Smokoe Joe
25th May 2016 11:59

OK, figures re-done with correct rates

To re-iterate, these are monthly not annual calculations!

40% = 118000/12 = £9833.33

NI free = £672 pm, but I did take from payroll software and forgot directors rules applied, so re-did that too!

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Replying to Smokoe Joe:
joe
By Smokoe Joe
25th May 2016 12:23

All updated, damn directors NI - still significant saving s if I have it right now, glad I asked!

Thanks (0)
joe
By Smokoe Joe
26th May 2016 11:44

Lots looking, have I got it right now?

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