Options for large amount of money in ltd company?

[lukemg]

What a (mostly) good thread, thanks all.
Not in the same position as have mostly extracted what I can each year into SIPP's etc but I might still need to run down a sum in my Ltd. Last time I had a break from work, accountant started rumbling that I was still taking a salary when the co wasn't generating revenue although taking dividends seemed fine.
Is he right ? Surely if I'm on an extended break this could purely be struggle to find work and the company could keep paying salary for years ?

[Maslins]

What a (mostly) good thread, thanks all.
Not in the same position as have mostly extracted what I can each year into SIPP's etc but I might still need to run down a sum in my Ltd. Last time I had a break from work, accountant started rumbling that I was still taking a salary when the co wasn't generating revenue although taking dividends seemed fine.
Is he right ? Surely if I'm on an extended break this could purely be struggle to find work and the company could keep paying salary for years ?

Well, the salary is meant to be paying you for work done, whilst the dividend is rewarding you for your investment. Imagine you were a shareholder and employee of a big corporate instead. If you stopped working, the salary would almost certainly stop, but the dividends wouldn't.

In practice though salaries contractors/freelancers take from their companies are often very low value. Add to that there's some argument that you may be looking for work, dealing with ongoing admin of running the company. Plus you're the boss of the company, so can decide how much you pay people to do what.

Short term, continuing to pay a salary is fine. Longer term, it may not make sense. If work stops coming in, the company's presumably making a loss. You can typically carry those back one year against profits, but beyond that, the company making further new losses may not be able to get any CT back.