Re: The order of taxable income for Directors?

"Tim" wrote:
The correct method is PAYE first, then dividends afterwards:

PAYE : 4895 @0%, 2090 @10% & 1015 @22% = 432.
Dividends: 29295 @10% & 4038 @32.5% = 4242.

Total: 4674.


But if you calculated tax on dividends first then PAYE afterwards:

Dividends: 4895 @10% & 28438 @10% = 3333.
PAYE : 3962 @22% & 4038 @40% = 2487.

Total: 5820.

DIFFERENCE: 1146.

"Ronald Raygun" wrote
E&OE, eh?

Eh?

"Ronald Raygun" wrote
Sir has forgotten to deduct the 10% dividend tax credits.

No I haven't!
I was showing the *total* tax liability for the year -- not
the "tax left to pay after deducting the notional tax credit".

"Ronald Raygun" wrote
But of course as the omission occurred in both
methods, it does not of course affect the difference.

Indeed. No errors anywhere! (?)



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