Max Dividend If No Salary Taken 2015/16

[WordIsBond]

Any thoughts on this?

Two thoughts:
1. You are probably right, that you shouldn't take any salary.
2. NLUK is definitely right, you should ask your accountant.

[psychocandy]

OP - NLUK is right and you should ask your accountant.

Also, you do know that even though you may not have paid salary yet this tax year, it doesnt matter - you can "catch up". i.e. if accountant says yes £10K is what you want this year, then no problem with just spreading those through the remaining months. It doesnt "have" to be 12 payments.

(Only issue though is it WILL attract PAYE because of this but it all gets sorted at tax return time - you just have to wait).

[ASB]

(Only issue though is it WILL attract PAYE because of this but it all gets sorted at tax return time - you just have to wait).

Not definitely. On the assumption it is not a W1/M1 tax code held by the OP then assuming a 10k salary they are a number of choices:-

1. Pay it at 1250/pm for the next 8 months. This should attract any PAYE because the freepay to date is 3.3k.
2. Pay 4166 now then 833 for each remaining month. Same as above, should be covered by free pay.

NI of course is a bit more complex, on the assumption that the proportionate directors method is used to calculate that should still come out equal over the year. Of course reducing salary to ensure no NI ispaid is a possibility, but ensuring it is a good enoughlevel (which can still attract no NI) to get a years pension credit would be sensible.

This does all assume that there isn't some weird reason why the OP would be better off without paying a salary.

[psychocandy]

Not definitely. On the assumption it is not a W1/M1 tax code held by the OP then assuming a 10k salary they are a number of choices:-

1. Pay it at 1250/pm for the next 8 months. This should attract any PAYE because the freepay to date is 3.3k.
2. Pay 4166 now then 833 for each remaining month. Same as above, should be covered by free pay.

NI of course is a bit more complex, on the assumption that the proportionate directors method is used to calculate that should still come out equal over the year. Of course reducing salary to ensure no NI ispaid is a possibility, but ensuring it is a good enoughlevel (which can still attract no NI) to get a years pension credit would be sensible.

This does all assume that there isn't some weird reason why the OP would be better off without paying a salary.

Perhaps its NI Im thinking about then....

[ASB]

Perhaps its NI Im thinking about then....

It is entirely possible that if a request is made for a tax code for an employee/director then it will come through with a W1/M1 basis in which case PAYE is calculated individually each month rather than cumulatively and this will be corrected with either the SATR or when a non W/M1 code is finally produced.

But certainly more likely with NI - though it doesn't take the SATR to resolve it.

It is permitted to use apply NI to directors on a non cumulated basis (and certainly easier than either of the alternate calculation methods for directors). In this case the month 12 payment should be calculated differently to take account of an annual earnings period which balances everything out.

https://www.gov.uk/government/upload...__2015.pdf.pdf

[FMCG]

Thanks. People like me appreciate the help and experience/guidance/input/thoughts (plus what sounds once in a while like a bo11ocking) from the more experienced ones on here.

As a Director of my own company think that I am responsible if HMRC ever choose to investigate, with some help from my accountant.

WRT this topic. Ended up with 2 companies as decided to move accountant as 1st set not really delivering "anticipated service" plus always last minute even when my paperwork submitted to them a week after my VAT Q ended. Given my discomfort, started a 2nd company simultaneously moving to new accountant ie a clean slate. HOWEVER as with all these things there is baggage.......

The baggage is just over £100K of money in the old company (CT/VAT/NI/etc all upto date) even though has not "traded" since October 14 (Y/E Jul 15). Simply trying to "recover" as much as "allowable" ........essentially trying to get below £25K MVL limit PLUS before 16/17 dividend rule changes come into play. My logic was - take no salary but max dividend (already transferred shares in readiness so that my shareholding is 35%).

Generally have a good route around using the search facility and online calculators (ironically some posters paste the same link that I have visited.....so must be doing something right ) before asking here - as everyday here is a "schoolday" and much appreciated.

[northernladuk]

Hmm how can you use MVL limits when you have another company open and are still doing the same thing. Sounds like aggressive tax avoidance using a phoenixing model to me.

You should be transferring the money in the old company to the new one, not getting it out under the veil of no longer trading shouldn't you??

[FMCG]

Similar but not same skillset in a different sector. None of the existing clients.

Spoke to 3 different accountants before embarking on this route who agreed "would be allowable".

HMRC may view differently at some stage?

Always been open and honest with HMRC eg even with FRS declared registration number of "old" company.

[WordIsBond]

An accountant who knows the full details is better equipped to advise you on the MVL thing than someone on the Internet who doesn't. So if you took advice, it is probably ok, but you are responsible, obviously.

If you ended trading in October 14, you presumably had profit for 2014-2015 on which corporation tax is due. Given that, viewing the old company in isolation you almost certainly should take a salary this year and carry back the loss to cut the CT bill -- unless, of course, you are going to take a salary from your new company instead. But if the goal is to get max out of the OldCo, salary is more efficient. It also has the benefit of not being grossed up, which lets you get a little more out.

You really need to sit down and discuss it in detail with an accountant. Ask him about paying salary to create a loss and carrying it back to recover corporation tax.

I didn't entirely get the 35% shareholding. Did you mean you've transferred most of the shareholding to a spouse?