Higher Rate and Take Home - What do you prefer?

[slice16]

Morning All,

I was just wondering, what do you guys typically do with your take home pay? For the last few years contracting, I have pretty much stuck to the lower rate threshold and built up a nice warchest, with the odd pension contribution. Only until recently, I took a nice divi out to pay for a house deposit.

What is your general feeling to taking out money and sending yourselves into the higher rate threshold? Do you favour the larger monthly amount, or take out a bigger divi as and when you need to?

This isn't a question about the best option, more of a poll

Cheers

[northernladuk]

Personally I am at the stage where the tax threshold is a nice to consider but no way a hard stop. If I need a few extra K over the threshold it's done without a thought. I certainly don't let the tax levels impact my life anymore. I work with a couple of guys that take Directors Loans to stay under the threshold and pay it back next year which they never do and end up worrying more about it than living.

The thresholds are there to help me maximise my situation where possible, not rule my life.

[TheFaQQer]

I take £10k salary, MrsF takes £5k (whatever the NI threshold is) for her work. Dividend of £32k at the start of the tax year, £8k to MrsF for her shareholding.

Money goes into a Santander 123 account for me, and one in joint names so we get the 3% interest on that for the year. Anything cash balance over £40k goes elsewhere for saving.

Company money left over gets put into various accounts - at year end, corporation tax money gets locked away for 9 months in a fixed term account (Aldermore), some goes into Aldermore instant access, some goes into CCAB 30 day account to get better interest rates. Nowhere has more than £80k in total because of the FSCS scheme. Company also pays into a pension fund for me and MrsF every month.

I don't need more money to live off, so I may as well leave it in the company so that when I close it down I can get ER on the balance and take it out that way.

If I needed more money (eg. I've just booked the roofing company to come and re-roof the house, and we'll get a wood burning stove at the same time while the scaffolding is up), I'd take it out of the company. But I'd prefer not to if I didn't need it, though.

[GlenW]

If I needed more money (eg. I've just booked the roofing company to come and re-roof the house, and we'll get a wood burning stove at the same time while the scaffolding is up), I'd take it out of the company. But I'd prefer not to if I didn't need it, though.

I didn't know the company can pay for a wood burning stove! What if it has an electric fan on it, can you claim any tax back?

[jamesbrown]

I take £10k salary, MrsF takes £5k (whatever the NI threshold is) for her work. Dividend of £32k at the start of the tax year, £8k to MrsF for her shareholding.

Money goes into a Santander 123 account for me, and one in joint names so we get the 3% interest on that for the year. Anything cash balance over £40k goes elsewhere for saving.

Company money left over gets put into various accounts - at year end, corporation tax money gets locked away for 9 months in a fixed term account (Aldermore), some goes into Aldermore instant access, some goes into CCAB 30 day account to get better interest rates. Nowhere has more than £80k in total because of the FSCS scheme. Company also pays into a pension fund for me and MrsF every month.

I don't need more money to live off, so I may as well leave it in the company so that when I close it down I can get ER on the balance and take it out that way.

If I needed more money (eg. I've just booked the roofing company to come and re-roof the house, and we'll get a wood burning stove at the same time while the scaffolding is up), I'd take it out of the company. But I'd prefer not to if I didn't need it, though.

Similar, without the part about the Mrs, and I wouldn't hesitate to take more as NLUK mentions. Note that the FSCS threshold is 85k.

[TheFaQQer]

I didn't know the company can pay for a wood burning stove! What if it has an electric fan on it, can you claim any tax back?

We're probably going to get two stoves, so that makes it OK

[northernladuk]

We're probably going to get two stoves, so that makes it OK

Only two? What is going to be heating the south and west wings of FaQQer towers then?

[slice16]

Thanks for the replies. some interesting thoughts on things

I like the idea of a big divi at the beginning of the year. I typically take a divi once every few months.

Taking it at the beginning of the year and stashing it in a interest account shoudl be good

[northernladuk]

Thanks for the replies. some interesting thoughts on things

I like the idea of a big divi at the beginning of the year. I typically take a divi once every few months.

Taking it at the beginning of the year and stashing it in a interest account shoudl be good

I do find it very surprising people don't do this more. I had one guy say he had enough to do it but it was his warchest so he didn't want to touch it. I did try and explain about it still being his warchest, just in a high interest account but he didn't get it so gave up.

[psychocandy]

Morning All,

I was just wondering, what do you guys typically do with your take home pay? For the last few years contracting, I have pretty much stuck to the lower rate threshold and built up a nice warchest, with the odd pension contribution. Only until recently, I took a nice divi out to pay for a house deposit.

What is your general feeling to taking out money and sending yourselves into the higher rate threshold? Do you favour the larger monthly amount, or take out a bigger divi as and when you need to?

This isn't a question about the best option, more of a poll

Cheers

£10K salary. Then split dividends with mrs. (she earns about £12K part time in her own job) so we both pretty much maximise all of our lower limit this way.

Also, some clients last few years have been 50+ miles away so fair chunk in expenses at 45p mile (until you get to the limit).

Not earned enough to go over into 40% past few years mind. I've left it in company in past and been able to maximise dividends the next year (lower earnings).