Change in salary after tax year end - tax question

[TheFaQQer]

I think it might be related to also having them look into income shifting to the other half... I guess if MyCo has already paid at least one salary to each director (myself and the other half) then the horse has bolted and it would need to continue to do so? Or is that not necessarily true and we can just see that as a "once off" and have MyCo start paying it all later?

If it's gone through RTI already, then it will count as salary already paid. But you can stop the payroll at any stage - I've done it after extended periods of bench time.

And how do I say to my accountants that "despite your advice, MyCo won't be paying salaries to myself and wife for the rest of the tax year"??

You are the client, and it's your neck on the line. My accountant provides advice - some I take, some I ignore, but always from a position of understanding what and why they are suggesting something. For example, in the past they have suggested paying NMW which I have declined.

If the accountant cannot accept that, then fire them and move on.

[JRCT]

I think it might be related to also having them look into income shifting to the other half... I guess if MyCo has already paid at least one salary to each director (myself and the other half) then the horse has bolted and it would need to continue to do so? Or is that not necessarily true and we can just see that as a "once off" and have MyCo start paying it all later?

And how do I say to my accountants that "despite your advice, MyCo won't be paying salaries to myself and wife for the rest of the tax year"??

What has your wife's salary got to do with your situation?

You can pay her salary (assuming she's 'working' for your Ltd) without paying yourself, and vice versa.

[Alan @ BroomeAffinity]

This seems to be an interesting accountant/client relationship you have. It's seems odd to me that you question the advice, clearly have no confidence in what you are being advised, yet you aren't willing to change, or indeed risk offending him by questioning his advice. Ask him to explain his reasoning (which seems flawed to me, but I don't have all the info), and if you're still not happy, a) stick to your guns, or b) bin him and get somebody you can have a conversation with.

[Syntyrion]

This seems to be an interesting accountant/client relationship you have. It's seems odd to me that you question the advice, clearly have no confidence in what you are being advised, yet you aren't willing to change, or indeed risk offending him by questioning his advice. Ask him to explain his reasoning (which seems flawed to me, but I don't have all the info), and if you're still not happy, a) stick to your guns, or b) bin him and get somebody you can have a conversation with.

I don't have too much trust in them, but ... in my field (not IT) it is a minefield for getting PI cover (or prohibitvely expensive). The accountants have been able to get cover for me (they have a deal with a broker/underwriter, it seems) - so to enable me to do contracting at all I am a bit stuck with them for the foreseeable future at least.

[Alan @ BroomeAffinity]

I don't have too much trust in them, but ... in my field (not IT) it is a minefield for getting PI cover (or prohibitvely expensive). The accountants have been able to get cover for me (they have a deal with a broker/underwriter, it seems) - so to enable me to do contracting at all I am a bit stuck with them for the foreseeable future at least.

Well, if you now have the cover, you also have the broker/underwriter details. And most accountants have good PI contacts.

[Sausage Surprise]

Hi. Though I have been lurking for some time, this is my first post.

I have recently gone contractor after being permie for all my career. I have a tax question (I am not sure my current accountants are getting it right), so would be grateful if anyone knows (I don't really want to pay for two sets of accountants, and am kind of tied to the current lot for now).

I had a pretty well paying permie job but decided to leave that for some of the usual reasons. My taxable income (which includes some property rental income) for the year since April 2014 is (just) over 100k; I would prefer to take all the excess over 100k and stick it in a pension so as to avoid the "60% band", and not pay myself anything at all (salary or divs) until 6 April (living off savings, effectively).

The current (contractor) accountants have said that I am more likely to face an investigation from HMRC if I pay low/no salary now and then suddenly ramp it up to (around) £830 pm in the new tax year. However, I spoke with a friend who is an accountant (but not a "contractor specialist") and he reckons this is not correct, and that it would be fine to pay myself nothing until April and then start paying a salary and take some dividends.

Any thoughts / advice? Any experience of this happening?

Thanks.

Rubbish...no basis in fact whatsoever

[Jessica@WhiteFieldTax]

Rubbish...no basis in fact whatsoever

Agree.

@OP - its your company, you decide

[TheCyclingProgrammer]

Part of your accountant's job is to help you save paying unnecessary tax whilst staying within the rules.

Suggesting you pay yourself a salary when you have used up your personal allowance and to pay dividends when they would be charged at the higher rate and you don't actually need the money would seem rather counter to the above.

Leave the profit in your company for a rainy day, start paying salary in the new tax year, possibly get a new accountant.

[Syntyrion]

I have asked them for an exact explanation. Will let you know where it comes out. Thanks for the advice / feedback.