paying a salary while not trading

[moorfield]

If I take 12 months off say to pursue plan B, but continue to pay myself a small salary from ltdco say £6-10k ish out of retained earnings while it's not trading ie I'm not raising invoices - is that all above board with Hector?

Maybe a dumb question but I've seen different replies on old threads here!

[ratewhore]

You are trading, you're just not billing.

Yes you can pay yourself from your Ltd. Anyone who says otherwise does not know what they are talking about...

[chris79]

Collect £350k in your business account then just take the rest of your life off and pay yourself £15k a year out the business. That's one of my (semi)retirement options/theories... (obviously put the money into a well paying interest account too).

[VectraMan]

I am. Though that brings up an interesting point I'll post in a new thread.

[Likely]

Related question:

If the ammount of PAYE salary that you have already paid yourself during this accounting year is over 10 K which is roughly 1 year salary on the minimum national rate , does it make sense to keep paying PAYE ? Or the HMRC should be satisfied ( i know ) that you paid enough PAYE and all further earnings should be taken as dividends ?

[chicane]

Collect £350k in your business account then just take the rest of your life off and pay yourself £15k a year out the business. That's one of my (semi)retirement options/theories... (obviously put the money into a well paying interest account too).

I was planning on doing something similar until my accountant advised against it. He reckons that HMRC might take a dim view of a small company accumulating hundreds of thousands of pounds in their bank account and drip-feeding it down to the shareholders/employees over a long period of time.

[Alan @ BroomeAffinity]

If you're not trading, just shut the company down and extract your capital and take entrepreneurs relief.

[ASB]

Related question:

If the ammount of PAYE salary that you have already paid yourself during this accounting year is over 10 K which is roughly 1 year salary on the minimum national rate , does it make sense to keep paying PAYE ? Or the HMRC should be satisfied ( i know ) that you paid enough PAYE and all further earnings should be taken as dividends ?

From a simple tax/ni point of view it makes no sense to pay yourself above 5035 (updated recently though). At this level you still get your full years credit for pension and don't actually pay any NI at all. This won't give you any SSP (serps) credits though.

This does not meet minimum wage requirements - but if you are a director without a service contract then this doesn't matter (DTI view).

Obviously you need to consider your IR35 position.

[Alan @ BroomeAffinity]

Obviously you need to consider your IR35 position.

Not an issue if there is no contract being worked on.

[pmeswani]

Not an issue if there is no contract being worked on.

If one is not actively working for 2 years and is claiming a salary / dividends, won't they get caught out by IR35? Sorry, am displaying my ignorance here.