Should a company pay the directors tax payments?

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Hi

Due to the increase tax due on dividends would it be beneficial for the company to make the tax payments?

Currently the increase in tax means we need more dividends which results in more tax, then more dividned.... Would it be more tax efficient if the company paid the personal tax bills and incorporate these payments as a beneift in kind?

 

Thanks

Replies (22)

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By Paul D Utherone
04th Jan 2018 13:51

Well it's a personal liability so how do you propose doing this and what will you achieve?

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By bernard michael
04th Jan 2018 13:53

You haven't supplied enough information about the directors personal tax affairs to make an educated guess. Why not ask the director's accountants rather than us

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By Tim Vane
04th Jan 2018 14:16

A company is legally required to collect tax from the director if he is being paid under PAYE.

Not sure what you mean by dividends. Directors don't receive dividends.

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Replying to Tim Vane:
RLI
By lionofludesch
04th Jan 2018 14:19

A decent Venn diagram will suggest otherwise.

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Replying to lionofludesch:
By Tim Vane
04th Jan 2018 14:22

Post hoc ergo propter hoc

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Replying to Tim Vane:
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By andy.partridge
04th Jan 2018 15:00

I'm definitely wearing my lucky socks this month

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RLI
By lionofludesch
04th Jan 2018 14:24

Quote "Due to the increase tax due on dividends would it be beneficial for the company to make the tax payments?

Currently the increase in tax means we need more dividends which results in more tax, then more dividend...."

If the company pays your tax, you'll owe the company the money. There'll be a charge to s455 while you owe the company any money. You can only recover this by paying off your debt. Maybe with another dividend.

The fact is that a lot of folk - accountants included - have been ripping the backside out of dividend taxation for the last 45 years. HMRC have got a bit fed up with it and, perhaps belatedly, have decided they're going to make it less attractive.

It's still cheaper than paying a salary.

Sounds like you need to consult an accountant.

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Replying to lionofludesch:
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By Accountant A
04th Jan 2018 14:30

lionofludesch wrote:

Sounds like you need to consult an accountant.

In 2012, he was holding himself out as one with various "I have a client ..." questions.

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Replying to Accountant A:
Oaklea
By Chris.Mann
04th Jan 2018 14:52

As I read your response, what you're really saying is, that our Christmas Tree friend, has made no tangible improvement, since 2012?

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By ireallyshouldknowthisbut
04th Jan 2018 14:36

You sir, win QUESTION OF THE DAY!!!!

Congratulation for failing to comprehend even the basics of how tax works.

Well done given the very tough competition.

But what is that? Yes ! Indeed ! there is still time for someone to ask a more stupid question.

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Flag of the Soviet Union
By thevaliant
04th Jan 2018 14:50

Should a company pay a directors Saturday afternoon shop at Asda?

The answer to that question is the same as the answer to yours.

Not that I've not seen a company-person basically be one and the same. It's MY company and MY money, so I'm definitely putting the Saturday afternoon shop through the company. Sundry expenses nominal is in excess of £100k.... and no salary nor dividends taken. Everyone's a winner... till they go to prison.

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Replying to thevaliant:
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By andy.partridge
04th Jan 2018 15:04

Sundry expenses is a dead giveaway on director drawings. Put it to cost of sales - much more subtle.

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Replying to andy.partridge:
Flag of the Soviet Union
By thevaliant
04th Jan 2018 15:14

That would involve the client having a brain.

Plus, the level of 'Sundry' in this case was so high that even dumping it in Cost of Sales would've distorted the margin dramatically from industry norms.

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Replying to andy.partridge:
Portia profile image
By Portia Nina Levin
04th Jan 2018 15:16

Eh? Surely it's part of the tax charge in the accounts?

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Replying to Portia Nina Levin:
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By andy.partridge
04th Jan 2018 16:16

Now that is a cunning stunt.

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Replying to andy.partridge:
Portia profile image
By Portia Nina Levin
04th Jan 2018 16:55

I never knew you were in to pig 5natch.

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Replying to Portia Nina Levin:
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By andy.partridge
04th Jan 2018 18:22

Didn't Cameron make it acceptable, if not fashionable?
https://en.wikipedia.org/wiki/Piggate

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Replying to andy.partridge:
Red Leader
By Red Leader
04th Jan 2018 16:49

Yes, accountants make the best fraudsters.

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Replying to Red Leader:
paddle steamer
By DJKL
04th Jan 2018 16:58

Very true, C T charge is the one account heading for which I have never been asked by HMRC to supply a breakdown.

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Replying to DJKL:
RLI
By lionofludesch
04th Jan 2018 18:16

Yeah, but you don't get tax relief on the tax.

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Replying to lionofludesch:
paddle steamer
By DJKL
04th Jan 2018 19:08

Wanting ones cake and eating it takes the biscuit (or the cake subject to one's VAT perspective)

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RLI
By lionofludesch
04th Jan 2018 15:08

If you weren't a company, the business could pay your tax - no problem.

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