The Practical Guide to Limited Company Tax
If you have chosen to operate your business as a limited com...
By Chris Martins D'Almeida on 17th March 2016
Coming in the next release…
The new tax year is fast approaching and we’re here to help you understand your potential personal dividend tax liabilities for the 2016/2017 tax year and beyond.
The dividend changes themselves have been outlined here before. You’ll also have received communication from your personal client account recently, outlining the approach to putting your salary and dividend target for 2016/17 in place.
To manage these changes in the Boox app, we’ve introduced a logic to estimate and communicate the personal liability.
As soon as yourself or one of your shareholders withdraws dividends that exceed the tax free allowance, you will be alerted in your pay breakdown. This means you’ll have to start setting aside funds from your personal account to cover this liability.
We’ll also send you an email at that stage (and again if/when the higher or additional rate thresholds are exceeded). If you click on the ‘Total’ dividend amount for the shareholder, a breakdown of the estimated liability at that stage will be shown:
There’s a link to the Salary and Dividends chart. This breaks down the dividend, salary and other income for the year and gives you simple visualisation of where the different dividend tax thresholds take effect. Hover over the dividend data (in the bar chart) to see a breakdown of the estimated liability:
This chart can also be accessed on the Home Dashboard and through Accounting > Reports > Personal Reports.
As well as showing the liability based on the current values, the chart also predicts the income for the end of the year based on what has been taken currently and the remaining pay periods in the year.
The grey bar at the end of the chart represents the forecasted year-end dividend total. Again, you can hover over this to see an estimate of the tax liability at the year-end based on the prediction.
Remember, this dividend tax is a personal liability and therefore funds should be set aside from your personal account(s) to cover this liability, not from the business.
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