robbo99.:
(wages) as dividends which has a tax free threshold which once reached is taxed at low rates above and beyond, with once again no ni liability on dividends.
Dividends are paid out of post tax profit so they’re paid out of Limited Company income which has already had Corporation Tax applied so the money has already been taxed. So they’re already not totally tax free but CT is at 19% so they save a little. The tax free part of dividends as income is to save administration as there is a dividend allowance you can claim for the rest so that the money doesn’t end up being double taxed.
But for clarification there isn’t a single penny paid out in Dividends which hasn’t been taxed at one point or another.