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I have a small business and am taking dividends below the tax allowance

(9 Posts)
BumptiousandBustly Sun 28-Aug-11 21:09:31

IF I am taking dividends below the tax allowance (a lot below) do I still need to file tax returns?

mranchovy Mon 29-Aug-11 00:03:18

I assume this is a limited company? The company will have to complete a tax return, and if you have been sent an individual tax return (or a notice to complete a return), you need to complete and return it.

belledechocchipcookie Mon 29-Aug-11 00:06:05

Yup. Even if you're losing money they want a tax return.

BumptiousandBustly Tue 30-Aug-11 08:06:01

OK, thanks ladies - Yes It is a limited company and we have, of course, filled tax returns for it. I have not been sent a personal tax return to fill in, does that mean they don't want one, or do I need to get one from them?

ChasingSquirrels Tue 30-Aug-11 08:10:10

You need to inform HMRC that you have a new source of income (dividends). They will then probably decide you need to do a tax return.
As an aside presumably you are also taking salary up to the personal allowance before the dividends.

BumptiousandBustly Tue 30-Aug-11 19:42:26

chasing squirells - nope - this is currently my only income (SAHM) - so dividends - presumably means no NI etc - but its the only money I am taking from the business - so should be no tax on it i presume - AARRRGG - Maybe I will have to contact the tax office, or some kind of tax advisor

BumptiousandBustly Tue 30-Aug-11 19:43:04

(NB - its a really small business - only started a year ago - so am genuinely only taking very small amount)

ChasingSquirrels Tue 30-Aug-11 20:42:34

The NI limit is almost identical to the tax personal allowance.
If you have no other income you should, without any shadow of a doubt, be taking a salary upto a maximum level of the NI limit.
This remains free of personal tax and NI (as it is below the limits) but is tax deductible for your company - which dividends are not.
Depending on how much you take it may also bring you within the 2nd state pension regime and maintains your NI contributions (there is a small band where up don't actually pay NI but your record is treated as if you have).

I would suggest you get some decent advice, who is sorting your company accounts and tax return? They should have advised you of the above.

BumptiousandBustly Wed 31-Aug-11 11:03:27

Chasing squirils - its my brother's wife's sister! - I will get some decent advice thankyou and and go from there

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