Inside IR35 - no dividend payments at all?

[Whoknows]

Being inside IR35 with a single running contract, no other company income - would there be any circumstances where you could still receive a dividend payment (alongside the large salary)

Looking at the popular calculators (e.g. Nixon Williams) the IR35 output shows a net dividend of £3k+ (on £500/day).

Can someone explain?

[Kenny@MyAccountantFriend]

As you have the 5% allowance for expenses if you have a high day rate it is still possible to make a profit from this amount.

You would also have a Corporation Tax payment on this profit too.

[Whoknows]

I also have very high (allowable) travel expenses, which are all reimbursed by my client - putting my turnover up. So the 5% goes a bit further.....but my accountant is telling me there is no dividend to pay, only salary.

[northernladuk]

Did you ask your account to explain to you exactly why this is so you can fully understand? Did they mention three 5% to you?

[VectraMan]

You gain some money on the FRS too.

[Whoknows]

Did you ask your account to explain to you exactly why this is so you can fully understand? Did they mention three 5% to you?

Yep I did, and the explanation was vague and confusing.

[Whoknows]

You gain some money on the FRS too.

Inside IR35 doesn't the FLS gain just go down as salary?

[VectraMan]

Inside IR35 doesn't the FLS gain just go down as salary?

Only if I'm doing it wrong.

It probably isn't worth paying a dividend as you're presumably already into the upper tax bracket. Leaving it in the company makes more sense. Perhaps this is what your accountant has decided for you.

[Whoknows]

Have queried again, and was told the 5% needs to be kept in reserves for expenses. Have asked for further clarification on this as it seems wrong to me. The FRS gain I thought was just treated as revenue and thus salary. Will query that again now too!

[SueEllen]

Have queried again, and was told the 5% needs to be kept in reserves for expenses. Have asked for further clarification on this as it seems wrong to me. The FRS gain I thought was just treated as revenue and thus salary. Will query that again now too!

Ask for the accountant to send you an email to explain this.

If the email is also confusing find another accountant.

(Most of us here could give you an answer but you need to clarify for yourself if your accountant is any good. )