Salary between contracts / on a break

[rt5mrt]

Hi,

I am planning to take a break from work and will not be billing my client company.
My questions is: does my ltd company pay me a salary while I'm not actually billing a client?

If yes, then let's assume that I have £10000 in my business bank account. Will I continue to get paid a salary till I exhaust this 10K or does a chunk of it have to be set aside for Corporate tax etc?

Thanks in advance.

[expat]

Hi,

I am planning to take a break from work and will not be billing my client company.
My questions is: does my ltd company pay me a salary while I'm not actually billing a client?

If yes, then let's assume that I have £10000 in my business bank account. Will I continue to get paid a salary till I exhaust this 10K or does a chunk of it have to be set aside for Corporate tax etc?

Thanks in advance.

ALWAYS keep the ltd company and yourself separate. They are 2 different things, that is the point of a company.
Therefore, contrary to the intuitive feeling that what is going on here is you working for the client, actually you are working for the ltd company, and it is (hopefully) doing some business that makes it some money.
If the company is not for the moment providing billable services to the client, it will generally not be able to bill the client. The director(s) of the ltd company will therefore have to make decisions about whether they can and will pay salary, given the condition of the business.

The director(s) of the ltd company is/are of course responsible for ensuring that the ltd company can meet its obligations, in particular any taxes that may be due.

IOW the company can pay you a salary if it is able to; but if it gives away the tax money it owes, Hector will be very cross.

[thunderlizard]

I am planning to take a break from work and will not be billing my client company.
My questions is: does my ltd company pay me a salary while I'm not actually billing a client?

If it's your company, it's your decision. But generally yes. Does a shop still pay its staff on days when they happen not to sell anything?

[Fred Bloggs]

Cheaper to (tax wise) pay a divi instead?

[scooterscot]

IOW the company can pay you a salary if it is able to; but if it gives away the tax money it owes, Hector will be very cross.

WHS - make sure you have enough funds for taxes. I'm not billing clients at the moment but I am continuing to pay my wife and I salaries.

[rt5mrt]

Thanks!

Thank you all. I suppose I need to have a chat with my accountant and see how much I can pay myself, while keeping aside enough for taxes.

Cheers!

[TheBigYinJames]

Thank you all. I suppose I need to have a chat with my accountant and see how much I can pay myself, while keeping aside enough for taxes.
Cheers!

Surely you should be doing it t'other way round? It's often most wise to work out your taxes first before wondering how much to pay yourself.

[VectraMan]

Thank you all. I suppose I need to have a chat with my accountant and see how much I can pay myself, while keeping aside enough for taxes.

Cheers!

It gets a bit complicated because salary counts against coporation tax. If you paid out all the money you've earned in this company year as salary, then you won't make a profit and have no CT to pay. However, if you've paid some dividends you need to make sure that you make at least enough profit over the year to cover the dividends - a good reason not to just pay monthly dividends as if it were salary (not that anybody would do that).

And don't forget VAT and accountancy fees.