I am new to contracting and having recently moved from permie to a contract position. My accountant has told me that I have the option of taking either the full dividend from the company at the end of each month or I can take out a lower dividend keeping the rest in the company accounts.
However, he also suggested that the latter option is better as when I will close the company, the available reserves in the company account will be subject to a lower tax than if I were to take the full amount available every month and pay a higher dividend tax on the income at the end of each FY.
I am not sure exactly how the accountant made the assumptions and if anyone on this forum can help make me decide which is the better option, that will be much appreciated.
However, he also suggested that the latter option is better as when I will close the company, the available reserves in the company account will be subject to a lower tax than if I were to take the full amount available every month and pay a higher dividend tax on the income at the end of each FY.
I am not sure exactly how the accountant made the assumptions and if anyone on this forum can help make me decide which is the better option, that will be much appreciated.
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