corporation tax

[Nixon Williams]

Thanks for the advice, basically, what i've done so far is pay myself and my wife ( a fellow director) about a £1000 per month each. This is to ensure that, together with expenses we have enough to live on. I intend, like you suggest, to pay a dividend (at the end of the year) out of profits.

I know that some people pay themselves the minimum wage and very large dividends to minimise tax/NI but surely this would mean paying a dividend monthly in order to provide a living income. Is it OK to do this?

many thanks

Yes, provided you make profits there is nothing to stop you paying dividends every month.

Alan

[boredsenseless]

Yes, provided you make profits there is nothing to stop you paying dividends every month.

Alan

Or indeed daily

[Nixon Williams]

Yes, but no company I have across works out its profit on a daily basis.

[meridian]

Thanks for the advice, basically, what i've done so far is pay myself and my wife ( a fellow director) about a £1000 per month each. This is to ensure that, together with expenses we have enough to live on. I intend, like you suggest, to pay a dividend (at the end of the year) out of profits.

I know that some people pay themselves the minimum wage and very large dividends to minimise tax/NI but surely this would mean paying a dividend monthly in order to provide a living income. Is it OK to do this?

many thanks

Be very careful how you are structuring this. By making payments to directors throughout the year but not declaring a dividend until the end of the year your directors loan accounts may be overdrawn, leading to taxable benefits in kind - in which case you will effectively be paying tax twice on the same income....
Also, if you are paying a regular amount without declaring it first as a dividend the IR may interpret this as salary and tax you accordingly.
As others have suggested, discuss with your accountant what is declared and paid when to avoid unintentional tax charges.

[boredsenseless]

Be very careful how you are structuring this. By making payments to directors throughout the year but not declaring a dividend until the end of the year your directors loan accounts may be overdrawn, leading to taxable benefits in kind - in which case you will effectively be paying tax twice on the same income....
Also, if you are paying a regular amount without declaring it first as a dividend the IR may interpret this as salary and tax you accordingly.
As others have suggested, discuss with your accountant what is declared and paid when to avoid unintentional tax charges.

You can't do this, you can declare 12 seperate dividends (if monthly) and draw them at that point. Or if you have the full amount in reserves already you can declare the full dividend, you just draw it in chunks, although I can't see why if you had the whole amount in reserve you wouldn;t just extract it the earliest point (tax efficiency withstanding)

[AtW]

Yes but you missed the point. Nobody pays twice: the company pays once, and the employee pays once.

The company pays twice because first it paid CT on money, that then were paid out as salary and company had to pay Employer NIC on the money that had CT paid on them already, if such salary payment happened BEFORE CT, then company would have saved amount that was gone on paying CT.

Also it makes cost of employment higher - like extra 19% on paying salary which is spread out.

Crap situation of double taxation that forces companies to effectively spend all money and hope for the best.