Kirkpatrick & Hopes - Succession Planning Accountants

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Email us: mail@kirkpatrickandhopes.com

Changes to taking money out of your company 2017-18

Changes to taking money out of your company 2017-18

This is the annual update for the amounts to withdraw from your company.

The changes to dividend tax means that most business owners be rewarded in dividends will pay more personal tax from 6th April 2017.

Current Position

For the 2016/17 tax year we advised a director / shareholder to take the following ‘optimum’ monthly amounts out of their personal company:

  • Salary £916.66 a month or £11,000 a year
  • Dividend of £2,666.67 a month or £32,000 a year

These amounts gave a small employee’s national insurance to pay on the salary of £352.80  and a personal income tax charge of £2,025.

This will give net income after tax and national insurance of £40,622 assuming you have no other sources of income.

These amounts are effectively doubled for ‘husband and wife’ companies.

Revised amounts from 6 April 2017

Our suggested amounts of salary and dividends to take are:

  • Salary £958.33 a month or £11,500 a year
  • Dividend of £2,791.66 a month or £33,500 a year.

These amounts gave a small employee’s national insurance to pay on the salary of £400.32 and a personal income tax charge of £2,137.50

This will give net income after tax and national insurance of £42,462 assuming you have no other sources of income.

These amounts are effectively doubled for ‘husband and wife’ companies.

These amounts are the ‘default‘ advice for the vast majority of our clients.  Again if a company is owned with your spouse, these amounts can be doubled.

You can of course take more from your company but extra dividends, salary or benefits will give you a higher tax bill, you may also pay extra tax if your household is in receipt of child benefit.

Please contact us  if you have any questions

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