Dividends or PAYE Dividends or PAYE - Page 2
Page 2 of 4 FirstFirst 1234 LastLast
Posts 11 to 20 of 33
  1. #11

    Super poster


    Join Date
    Jan 2009
    Location
    Near London, UK
    Posts
    4,332

    Default

    Quote Originally Posted by Contreras View Post
    In other words a saving of £4 per year.
    Yeah, not much in it. Quibbling over the right "optimum" salary is one thing but one thing for certain is not paying yourself salary is going probably doing to cost you in the region of £1500 in extra tax.

    I was going to add a "no salary" column to my 2014/15 spreadsheet but Google docs doesn't work on the iPad. I'll update it tomorrow.

  2. #12

    Super poster


    Join Date
    Jan 2009
    Location
    Near London, UK
    Posts
    4,332

    Default

    Turns out you can edit google spreadsheets on an iPad with the Drive app.

    Updated spreadsheet here:
    https://docs.google.com/spreadsheet/...Xc&usp=sharing

    Changes:
    * Fixed a small error in the corporation tax saving calculation; I was previously only counting the gross salary, but employers NI is also tax deductible.
    * Added the £641/month salary to this years figures for comparison. As expected, it's about £5 difference.
    * Added a column for no salary but now not sure why I bothered, as quite clearly the tax saving from this arrangement is nil.
    * Mainly out of curiosity, added an "All salary" column to show the difference if you take the largest salary possible without going into the higher rate. Note the difference in both overall tax cost, as well as reduction in monthly take home! This might not be completely accurate because I haven't checked the NI thresholds, but it's illustrative.
    Last edited by TheCyclingProgrammer; 5th February 2014 at 01:26.

  3. #13

    Ddraig Goch


    Join Date
    Apr 2011
    Location
    Cymru
    Posts
    10,503

    Default

    Quote Originally Posted by Cpo View Post
    I've recently started contracting and setup a limited company. I got an accountant who advised me to take dividends at quarterly intervals and that he didn't think it necessary to setup payroll. When I asked him what about national insurance contributions he said something along the lines of, at the end of the year we'll make a voluntary contribution to top it up.

    The accountant has now left the firm and the new guy is saying I need to setup payroll. I'm confused about the pros and cons of this are they just trying to make more money by charging me to run payroll?

    As the sole director do I need to pay myself a wage or is it acceptable to simply take a dividend 4 times a year?

    What does everyone think?
    Get a new accountant. This one is clueless.
    Rhyddid i lofnod psychocandy!!!!

  4. #14

    Contractor Among Contractors

    DirtyDog's Avatar
    Join Date
    Sep 2013
    Posts
    1,814

    Default

    Quote Originally Posted by psychocandy View Post
    Get a new accountant. This one is clueless.
    Disagree.

    The accountant is suggesting setting up payroll, which implies that they are thinking about using up some / all of the basic rate threshold to take money out of the company without paying as much tax as doing it via dividends alone. Also, if there are additional expenses which will be reclaimed (apart from mileage at the standard HMRC rates), you will need to have payroll set up.

    That sounds like they are more clued up than the previous accountant to me.
    Quote Originally Posted by MaryPoppins View Post
    I hadn't really understood this 'pwned' expression until I read DirtyDog's post.

  5. #15

    Super poster


    Join Date
    Aug 2008
    Posts
    4,036

    Default

    Quote Originally Posted by northernladuk View Post
    Why not take your dividends as early as you can to get them out of a virtually zero percent account and do something with it. Take the whole years allowance out right at the beginning of the tax year and slap it in your offset mortgage or something.
    this is why.......

    Quote Originally Posted by Cpo View Post
    I've recently started contracting and setup a limited company.
    What you suggest is for more seasoned contractors, with large amounts saved.

  6. #16

    More time posting than coding

    Craig at Nixon Williams's Avatar
    Join Date
    Sep 2012
    Location
    Blackpool
    Posts
    452

    Default

    In view of this:

    Quote Originally Posted by Cpo View Post
    I've recently started contracting and setup a limited company.
    This is the most important consideration for the OP:

    Quote Originally Posted by Wanderer View Post
    Have you already earned money this year from a PAYE job? If you have then it may be worth waiting till 6th April to start drawing a salary. Your accountant can advise based on your P45 from your last job.
    This point seems to have been overlooked for the sake of debating other things…

    Craig

  7. #17

    Nervous Newbie


    Join Date
    Feb 2014
    Posts
    2

    Default

    Thanks for all your responses folks, really helpful

  8. #18

    Default

    Quote Originally Posted by TheCyclingProgrammer View Post
    Nobody knows for certain as he final details haven't been announced but it should be a flat £2k allowance for ALL businesses.

    https://www.gov.uk/government/upload...3_Final_v2.doc

    I'm sure we will know by April.
    I hope it functions as a flat £2k allowance. I had read elsewhere it could be an exemption per employee, but the document you linked to doesn't imply that.

    Just out of curiosity, where is it written that it will not apply against employer NICs for contractors inside IR35? If HMRC is going to pretend the intermediary isn't there when it's convenient but still demand NICs due from the intermediary, surely you should be able to offset these? Because if they did (hypothetically) pursue them from the end client (the supposed employer), I can't see why the end client wouldn't be able to apply this exemption; so why is a PSC any different?

  9. #19

    Super poster


    Join Date
    Jan 2009
    Location
    Near London, UK
    Posts
    4,332

    Default

    Quote Originally Posted by Zero Liability View Post
    I hope it functions as a flat £2k allowance. I had read elsewhere it could be an exemption per employee, but the document you linked to doesn't imply that.

    Just out of curiosity, where is it written that it will not apply against employer NICs for contractors inside IR35? If HMRC is going to pretend the intermediary isn't there when it's convenient but still demand NICs due from the intermediary, surely you should be able to offset these? Because if they did (hypothetically) pursue them from the end client (the supposed employer), I can't see why the end client wouldn't be able to apply this exemption; so why is a PSC any different?
    There has been no suggestion from HMRC that PSCs will not eligible, whether inside or outside IR35, although I believe there has been some commentary from others to that effect. The only reference I've seen is this article that Martin @ NW posted in my previous salary thread:

    Every business and charity to receive a £2,000 employment allowance - Employers | UK Budget 2013 | Deloitte UK

  10. #20

    Godlike


    Join Date
    Jul 2005
    Location
    Somerset
    Posts
    5,450

    Default

    Quote Originally Posted by Zero Liability View Post
    I hope it functions as a flat £2k allowance. I had read elsewhere it could be an exemption per employee, but the document you linked to doesn't imply that.

    Just out of curiosity, where is it written that it will not apply against employer NICs for contractors inside IR35? If HMRC is going to pretend the intermediary isn't there when it's convenient but still demand NICs due from the intermediary, surely you should be able to offset these? Because if they did (hypothetically) pursue them from the end client (the supposed employer), I can't see why the end client wouldn't be able to apply this exemption; so why is a PSC any different?
    I believe it will apply. It applies to actual salaries and if these are paid then bingo.

    I don't think it will apply to deemed payments though. There isn't a salary paid. Only a tax calculation.

Tags for this Thread

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •