Charlotte is the owner of Bamburg Ltd. She requires advice on the alternative methods by which she can extract additional funds from the company.

Charlotte:
– Is UK resident and UK domiciled.
– Owns 100% of the ordinary share capital of Bamburg Ltd.
– Earns an annual salary from Bamburg Ltd of £63,000 and has no other income.
– Has two ideas to generate additional cash in Bamburg Ltd.
– Wants to receive an additional £14,000 (after the payment of all personal taxes) from Bamburg Ltd on 30 June 2014.

Alternative methods of extracting an additional £14,000 from Bamburg Ltd:
– Bamburg Ltd to pay Charlotte a bonus.
– Bamburg Ltd to pay Charlotte a dividend.

Required:
(i) Prepare calculations to determine whether it would be cheaper for Bamburg Ltd to pay Charlotte a bonus or a dividend, such that she would receive £14,000 after the payment of all personal taxes. (5 marks)