Draw salary from my limited company when out of contract

[psychocandy]

As far as I'm aware you could pay it all in one amount for the year, therefore the unpaid 2 months should not be an issue?
You would just increase the other payments to cover?

Yes if you've missed months you can just pay extra the other months to allow the total for the year to still be the same.

Only minor drawback is you may have to pay tax if for instance you pay double to catch up. Not the end of the world because its corrected at tax return time.

[psychocandy]

I would happily move away to another accountant but I'm afraid it would be a complete mess, to be honest.

I pay £114/month so it is not like the company is cheap. They should have at least gave me the choice if I want to stop paying salary or not but they did it like if it were mandatory by law. Maybe I should have asked the forum back then first...

So thinking if it is better to just go back to enable the payroll and pay salary, and forget about it. Not sure about the 2 unpaid months, if there is any way to recover it without actually making it worse to HMRC eyes.

I'm raising a complain with them anyway.

One of the big companies?

[AnotherGuy]

One of the big companies?

I would say yes, it is.

[gables]

As far as I'm aware you could pay it all in one amount for the year, therefore the unpaid 2 months should not be an issue?
You would just increase the other payments to cover?

Yup pretty sure you can do this, some thing in the back of my mind about NI contributions, if overpaid are gone. So I'd wait until PAYE year end (March) and make a payment that brought it all together as it would have been had it been paid monthly.

[SpontaneousOrder]

No confussion regarding this. I've continued paying dividends, and also they've confirmed that is absolutely fine. The issue seems to be with salary and expenses. They think if I'm not on a contract I'm not "working" so they literally said: "You need to see yourself as the employee of the company. No company would pay a salary to you if you are not doing any work for them, same rule applies to your Ltd company as well."

I'm a bit pissed off. Thinking what to do next.

Unless you crossed the financial year end/start then don't fret. Just pay yourself a bonus to make up for 5 months you didn't take a salary.

[SpontaneousOrder]

Yup pretty sure you can do this, some thing in the back of my mind about NI contributions, if overpaid are gone. So I'd wait until PAYE year end (March) and make a payment that brought it all together as it would have been had it been paid monthly.

Director's NI contributions are calculated on an annual basis, rather than monthly (or weekly). And we still have, for the time being, the 2k allowance for employe contributions.

[northernladuk]

Psycho.. Why don't you go with this lot... You could say you are permanently on JSA.

JSA Services. Umbrella Company and Accountant services

[northernladuk]

Well obviously but its £4000+ of your money. If you've got £4000 in there then theres the option to pay it out as a div before the end of your gig. Then claim JSA.

Not saying this works in every circumstance. Depends on your tax situation etc. If you've got to pay 40% on that div it might be worth keeping it to pay out as salary.

Of course, if you get to year end and have stopped salary then potentially you've not maximised the benefit of the salary. BUT, as I found out, miss a few months and then pay double/catchup other months (once back in a gig) to ensure same salary is paid for the year. (Although this may means 'some' tax is paid some months but this gets sorted at tax return time).

MODS - Want me to write a guide to claiming JSA that we can have as a sticky?

But if he has 4k to pay out in salary it's highly likely he's got over £16k personal savings and in the business so he will be not be eligible anyway?.. Or is that £16k limit still up for debate...

Found an interesting point on the Brookson site that hasn't been mentioned anywhere before..

Your claims to business expenses as a contractor

You need to bear in mind when considering claiming JSA the possible impact on your entitlement to expenses from your limited company. HMRC rules state that contractors are entitled to claim tax-free travel and subsistence to their main site providing certain conditions are met. These conditions are based on a long-term commitment to contracting and an ‘overarching’ contract with your limited company. By contrast, where an individual merely has a series of fixed term assignments through a number of different vehicles, HMRC can seek to refuse the tax-free treatment.

It is recommended that you don’t ‘regularly’ claim job seekers allowance between each assignment. This will increase the risk of challenge by HMRC due to starting and stopping contracts and losing the tax relief on these expenses. The legislation is very unclear but this risk should be considered before making any claim.

[psychocandy]

Director's NI contributions are calculated on an annual basis, rather than monthly (or weekly). And we still have, for the time being, the 2k allowance for employe contributions.

Ah yes thats why it doesnt screw things if u end up paying a larger salary.

Normally it depends on the amount and once its gone its gone isnt it? I remember having this argument with wifes employer (or wife did) when they decided to forget to pay her £1000 one month then just lumped it onto the next. There was a NI cost attached due to their error but they just didnt get it. Or care....

[psychocandy]

But if he has 4k to pay out in salary it's highly likely he's got over £16k personal savings and in the business so he will be not be eligible anyway?.. Or is that £16k limit still up for debate...

Found an interesting point on the Brookson site that hasn't been mentioned anywhere before..

Interesting.... But not sure how valid it would be in real life....

Cant see HMRC come steaming in and saying right no more expenses for you because you claimed JSA once or twice.

Would agree that if you claim it for a week every three months then it might be a case. I've not claimed for over 2 years now. And only twice total in last 10 years.