Minimise tax

[smileyface]

Can someone please tell me if there is something wrong with this approach to minimising tax:

Assume gross income £100K
Expenses £15K
Salary £10K

That leaves £75K to be taxed at 20% for corporation tax purposes, leaving £60K.

If in the 2014/15 tax year, I take £30K as dividends, (so that £30K + £10K = £40K is just below the lower tax band for income tax), that leaves £30K.

Now assuming I no longer work in 2015/16, can I take the remaining £30K without paying any tax?

If not, what is my best strategy (ASSUMING ALL ALONG I WILL NO LONGER WORK EVER AGAIN AFTER 5th April 2015)?

Thanks

[DimPrawn]

Best post in Accounting / Legal

This is forum is just for benched cretins to talk tulip.

HTH BIDI

[FatLazyContractor]

This is forum is just for Suity and his attention seeking.

HTH BIDI

FTFY

[jamesbrown]

Yes, better in the professional forums.

But, yes, you can pay yourself one or more dividends in 2015/16 as you see fit (subject to their being legal). You can't pay yourself a salary unless you're in contract or actively seeking contracts. I'd question your motives though. You're not reducing tax, in any sense (either for YourCo or you), by not working in 2015/16. You could also service contracts in 2015/16 and build up a warchest (while taking a salary, which has some benefits too). The profitability (and hence CT position) of YourCo and the income you take as salary/dividends (and hence income/dividend tax liabilities) are two completely different things.

[malvolio]

Yes, better in the professional forums.

But, yes, you can pay yourself one or more dividends in 2015/16 as you see fit (subject to their being legal). You can't pay yourself a salary unless you're in contract or actively seeking contracts. I'd question your motives though. You're not reducing tax, in any sense (either for YourCo or you), by not working in 2015/16. You could also service contracts in 2015/16 and build up a warchest (while taking a salary, which has some benefits too). The profitability (and hence CT position) of YourCo and the income you take as salary/dividends (and hence income/dividend tax liabilities) are two completely different things.

Sorry...?

[jamesbrown]

Sorry...?

You're excused.

[malvolio]

You're excused.

But you're not. That's bollocks.

[EternalOptimist]

15k expenses ????

holy bat, sh!tman

[jamesbrown]

But you're not. That's bollocks.

The company has ceased trading, since "ASSUMING ALL ALONG I WILL NO LONGER WORK EVER AGAIN AFTER 5th April 2015". Thereafter, based on intent alone, the company is liable to being designated a CIC. However, regardless of whether it is trading or actually run actively as a CIC, my question would be this: what is the purpose of the Director's remuneration? It is remuneration for their efforts in managing the company and soliciting work (or making investments in the case of a CIC). In other words, the salary must be reasonable and not purely reflect the existence of the office. I think it's tough to justify paying a salary indefinitely (i.e. for multiple years), including from a CIC where no investments are being made. So, the OP should pay the remaining profits as a dividend and have the company struck off or consider a capital distribution via an MvL IMHO.

[TheCyclingProgrammer]

I don't think, realistically, a minimal £10k salary will ever be challenged as unreasonable for a company director regardless of trading status.

If the board members of TFL can be paid between £18-24k a year plus expenses plus free unlimited travel for attending 4 meetings a year, then I don't think a £10k directors salary is going to raise any eyebrows.

Besides, how the hell are HMRC going to know if you're not actively looking for work, unless you tell them?