Kirkpatrick & Hopes - Succession Planning Accountants

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Email us: mail@kirkpatrickandhopes.com

Changes to taking money out of your company 2015-16

The amount of money you can withdraw from your company increases due to budget changes.

This is the annual update for the amounts to withdraw from your company for the tax year starting on 6 April 2015.

Current Position:
For the 2014/15 tax year we advised a director / shareholder to take the following ‘optimum’ monthly amounts out of their personal company:

•  Salary £833.33 a month or £9,999.96 a year

•  Dividend £2,389.88 a month or £28,678.56 a year

These amounts gave a small employee’s national insurance to pay on the salary of £245.28 but utilized the full increase to personal allowances to £10,000 per annum.

The net income after national insurance is £38,433. You will have no personal tax to pay assuming you have no other sources of income. These amounts are effectively doubled for ‘husband and wife’ companies.

Revised amounts from 6 April 2015:
The tax rates change from 6 April 2015 and this advice updates the amounts you can withdraw to avoid a personal tax bill while also withdrawing funds in the most tax efficient way from your company.

The numbers are revised because the personal allowance increases to £10,600 but the basic rate income threshold is again reduced.

The revised monthly amounts are:

• Salary £883.33 a month or £10,600.00 a year

• Dividend £2,383.87 a month or £28,606.50 a year

These amounts are the standard advice for the majority of our clients and this will be our ‘default’ advice.

There will be employee’s national insurance to pay on the salary of £325.12.

The employers national insurance cost is £343.34 but this will be covered in most small companies by the annual employer’s national insurance rebate of £2,000.

This will give net income after national insurance of £38,881. You will have no personal tax to pay assuming you have no other sources of income.

Again if a company is owned with your spouse, these amounts can be doubled.

This is an increase of £448 per person over the 2014-15 figures.

This will also mean that your company will now save Corporation Tax of £2,120 on the salary paid, compared with £2,000 for 2014/15.

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 would like us to prepare a calculation for you based on your individual circumstances.

 

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