Safe and Effective tax

[oraclesmith]

1. Is it safe from taxman if I don't get paid via monthly pay cycle?
2. Is giving dividents to both the shareholders a safe approach?
3. If I get paid the minimum (£5400 something), am I be eligible for NI benefits?

1. It doesn't matter. It's your company so you can pay yourself how you like. I pay myself a few times a year, whenever I believe the company can afford it. The directors of most genuine startup firms don't pay themselves a regular salary unless they really need to, because they're putting all their time and spare cash back into the business.

2. There is a broad assumption made by contributors to these threads (even the accountants) that the other shareholder is your wife/partner and that he/she isn't working, or at least not working for your company apart from doing a bit of admin - and that they will end up with a substantial dividend to utilise their unused tax allowance. Which is a bit of a big assumption !

The settlements legislation applies when the other shareholder doesn't really 'deserve' the dividend. If the other shareholder is a higher-rate taxpayer then it may be beneficial for you to declare a settlement with you as settlor, especially if both dividends plus your salary still keeps you under the 40% tax bracket. In this case the current settlements legislation will work in your favour and the other shareholder will avoid having to pay additional tax on his/her dividend. This is what I do, because my wife is a shareholder but she takes no real part in running or working for my company.

If the other shareholder is a fellow (substantial) fee earning consultant working for your company, then again, there is no real problem with having both of you as shareholders because you both make roughly equal contributions to company profits. In my opinion.