We currently advise a pay structure, for the tax year 6th April 2020 to 5th April 2021, as follows:
£732 per month Directors Standard Salary (£8,784 total salary for the year)
£41,216 Dividends for the year (approximately £3,434.66 per month) Please ensure the company has sufficient profit to pay this level of dividends.
This will bring you up to the higher rate tax limit and give you a tax liability of £2,662.50 due by 31st January 2022. As the payment due is over £1,000, a payment on account will also be required.
If you anticipate any additional personal income, please provide and I will advise.
As a general guide (and based on only the £732 per month salary) here are the anticipated levels of tax due on specific levels of dividend payments:
£10,000 = £321.30
£20,000 = £1,071.30
£30,000 = £1,821.30
£40,000 = £2,571.30
£50,000 = £5,517.30
£75,000 = £13,642.30
£91,216 = £18,912.50
£100,000 = £23,279.20
Payment on Account (delete as appropriate)
IF THE LIABILITY EXCEEDS £1,000 A PAYMENT ON ACCOUNT IS REQUIRED
As the liability for the year ended 5th April 2020 exceeded £1,000, a payment on account for the current tax year ended 5th April 2021 is required. This means that in January 2021 you will pay and additional half of the current tax years liabilty, less any payments on account already paid. A further half will be due in July 2021.
Based on a salary of £8,628 and dividends of £41,372 in the year ended 5th April 2020, you are due to make a payment on account of £1,331.25 by 31st January 2021 and £1,331.25 by 31st July 2021 on account of the year ended 5th April 2021.
PAYMENTS ON ACCOUNT
If the liability to 5th April 2021 exceeds £1,000, a payment on account of the next year's tax liability (ended 5th April 2022) will be due by 31st January 2022, and 31st July 2022. This is half of the current years liability and will mean that the tax due for the year ended 5th April 2022, will have been paid by 31st July 2022, and any adjustments will be due/repaid by 31st January 2023.