Moving from permanent to contracting - optimum salary, PAYE etc.

[winkie]

Hi,

I've recently moved into the world of contracting, having previously always been a permanent employee. I have some questions about drawing the optimal salary/dividends, PAYE etc...

For this tax year (2017/18), I was in a full-time permanent role for 4 months since the start of the tax year and received a monthly salary (Apr, May, June & July). I started my contract role in August, with my invoices being paid every 4 to 5 weeks. I have set up my own limited company to contract through.

I'm trying to figure out the best salary & dividends combination, as I obviously want to optimise and be as efficient as possible! However, all the references I can find on this subject make the assumption that the contract role begins at the start of the tax year, whereas my situation is different (as described above).

My questions are:
- what monthly salary should I draw from my company?
- what dividends should I draw from my company?
- how will this affect my NI contributions?

Thanks in advance for your responses!

Pete

[Patrick@Intouch]

Hello,

This would be best determined in a discussion as there are various factors and it would be useful for you to have different options illustrated for you.

Have you engaged an accountant yet?

[malvolio]

Hello,

This would be best determined in a discussion as there are various factors and it would be useful for you to have different options illustrated for you.

Have you engaged an accountant yet?

Beat me to it....

But this year is exceptional anyway so don't base any long term plans on it.

[l35kee]

My questions are:
- what monthly salary should I draw from my company?
- what dividends should I draw from my company?
- how will this affect my NI contributions?

Get an accountant. Have an introductory call/meeting with them.

Those 3 questions are easy, but you'll also get a load of answers for the questions you didn't even know you had to ask.

As a new-ish contractor myself having always been a permie, trust me when I say you'd be stupid not to.

[northernladuk]

Looks like my coaching and guidance is paying off at last. So proud of you all.

[TraceRacing]

Looks like my coaching and guidance is paying off at last. So proud of you all.

Have you spoken to your accountant regarding all the free advice you've given ?