Yeah, I see what you mean. It's another good reason to pay yourself a £10k salary in that event.
Yeah, I see what you mean. It's another good reason to pay yourself a £10k salary in that event.
Still gathering requirements...
BTW my accountant told me that it doesn't matter how often I take dividends - for instance each month - whereas a friend was advised by his to take dividends once a year. Does it really matter?
Thanks.
Contractor Among Contractors
Super poster
Not really. There is a line of thinking that HMRC would consider monthly dividends to actually be a "salary" but I'm not sure what basis there is for that (sounds like bollocks to me).
Personally I declare them quarterly although if you have a big enough war chest to do it (i.e. enough retained profit in the company), probably the best thing you can do, depending on your circumstances, is take the whole years worth in one go.
If you have an offset mortgage, you could stick it in there which saves you money, if you have a normal mortgage and your good enough at budgeting that you know you can afford overpayments, you could make a lump sum overpayment (which saves you more in interest than making regular monthly overpayments). Or you can stick some of it in an ISA although that won't earn you a whole lot right now.
Godlike
Tcp, the reason it sounds like bollocks is simple. It is.
the only thing that matters is that they are properly declared.
Absolutely. Just because something happens monthly it has absolutely no relation to anything else. A dividend and a salary might be paid monthly but they couldn't be more different. It's best IMO to take the whole dividend at the beginning of the year to slap it in something that is going to earn you more cash than the business account but only if you have the profit available to do so. Get it out as fast as you can rather than picking a system that leaves spare money in a poor interest account.
'CUK forum personality of 2011 - Winner - Yes really!!!!
Super poster
Does anybody know where this idea that you shouldn't take monthly dividends came from? It's quite odd. As ASB says, as long as their is sufficient retained profit and the correct paperwork is drawn up, a dividend is a dividend.
About the only genuine reasons for not taking them monthly that I can think of are 1) you can do more with the money if you take as much as you can in one go and b) less paperwork.
'CUK forum personality of 2011 - Winner - Yes really!!!!
Godlike
I think their is a view that it could invite comment from hmit. But since one would already be under investigation its probably irrelevant.
I dont recall any of the accountants being particularly cautious save for the natural make sure paperwork is ok.
I guess there could be problems with certain articless. However the remedy for an illegal dividend is that it gets repaid. Not that is magically turns into salary.
Super poster