Director’s Tax Return

02/06/2014

tax-return-home-picture

In April we reported on Director’s Salary and provided example of Director X desired income of £2,000pcm and how to abstract that from a Limited Company.

Once this is done a Director needs to inform HMRC by means of a Self Assessment Tax Return, some times if only income is Employment the HMRC may inform a Director no return is necessary, but if multiple incomes, the return becomes compulsory.

 

Tax Return Example for 2014/2015:

Income from Employment (Limited Y)                                 £7,956.00

Gross Dividends Received (Limited Y)                                  £17,826.67

Total Income                                                                             £25,522.67

Less Personal Allowance in Year                                          (£10,000.00) 

Taxable Income                                                                         £15,522.67

 

Due to Income left being Dividend (Personal Allowance covers Employment)  and below threshold of £31,865 rate of Tax is 10%, above this would attract 32.5%.

Tax Payable therefore £15,522.67 @ 10% =                            £1,552.27

 

Dividend Income is Gross. and therefore income received in Bank or Director’s Loan Account is net,  so suffer Tax at source.

On this occasion £17,826.67 less £16,044.00 is £1,782.67, you put this against Tax Payable, noting you can’t reclaim any residue.

Amount of Tax Suffered set against Tax Payable                 (£1,552.27)

 

Tax Payable for Tax Year 2014/2015 would be                     £0.00

 

Dividend Income Thresholds:

Taxable Income to £31,865.00 is 10%

From £31,865.00 to £150,000.00 is 32.5%

Above £150,000.00 is 37.5%