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Billing with no payroll, but get dividends

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    Billing with no payroll, but get dividends

    Hi,

    I'm contracting through my Limited company where I'm the director also, I have a customer where I used to provide consultancy services, now is more a monthy fee for maintenance and software subscription. I'm billing them in a monthly basis but I am wondering if I need to have a payroll for this. I'm considering to don't use a payroll to get money out of my Ltd, and do it through dividens at the end of the financial period. Do you have any caveat on this approach?

    Regards.

    #2
    Did you ask your accountant? They should be able to advise the most tax efficient way of getting your money out of your LTD. It's usually low salary to the threshold and then dividends.

    If you are confused then ask them.
    'CUK forum personality of 2011 - Winner - Yes really!!!!

    Comment


      #3
      Payroll means you can take advantage of the personal allowance and reduce your tax liability.
      I'm alright Jack

      Comment


        #4
        Originally posted by iandres View Post
        Hi,

        I'm contracting through my Limited company where I'm the director also, I have a customer where I used to provide consultancy services, now is more a monthy fee for maintenance and software subscription. I'm billing them in a monthly basis but I am wondering if I need to have a payroll for this. I'm considering to don't use a payroll to get money out of my Ltd, and do it through dividens at the end of the financial period. Do you have any caveat on this approach?

        Regards.
        Do you have any other income? If not running a payroll will mean you can use your full £12,700 a year tax allowance
        Originally posted by Stevie Wonder Boy
        I can't see any way to do it can you please advise?

        I want my account deleted and all of my information removed, I want to invoke my right to be forgotten.

        Comment


          #5
          On the assumption this is a side hustle so you have salary. No you don't need payroll. My last two Ltd Co's have not run payroll.
          Public Service Posting by the BBC - Bloggs Bulls**t Corp.
          Officially CUK certified - Thick as f**k.

          Comment


            #6
            Originally posted by BlasterBates View Post
            Payroll means you can take advantage of the personal allowance and reduce your tax liability.

            Dividends will also use your personal allowance as well (if you dont have a salary).

            I think salary will reduce your Corp Tax liability which dividends wont. As divis are paid after CT is calculated.

            Comment


              #7
              According to Crunch:
              "There may also be occasions where you decide not to pay yourself a salary during any given month, such as if you’ve taken a PAYE job. However, you still need to make sure you remain compliant with HMRC's Real-time information (RTI) regulations. Not making a submission on a monthly basis will incur penalties from HMRC."
              What happens if I don't perform a payroll run every month? | Crunch
              Real Time Information: improving the operation of Pay As You Earn - GOV.UK (www.gov.uk)

              I.e. there's a distinction between having a nil payroll and not having a payroll at all.

              Comment


                #8
                Originally posted by Fraidycat View Post
                I think salary will reduce your Corp Tax liability which dividends wont. As divis are paid after CT is calculated.
                Bingo!

                There is also the added bonus of having your NI stamp counted even if you earn below the threshold
                Originally posted by Stevie Wonder Boy
                I can't see any way to do it can you please advise?

                I want my account deleted and all of my information removed, I want to invoke my right to be forgotten.

                Comment


                  #9
                  Originally posted by Fraidycat View Post
                  Dividends will also use your personal allowance as well (if you dont have a salary).

                  I think salary will reduce your Corp Tax liability which dividends wont. As divis are paid after CT is calculated.
                  You think?
                  'CUK forum personality of 2011 - Winner - Yes really!!!!

                  Comment


                    #10
                    Originally posted by iandres View Post
                    Hi,

                    I'm contracting through my Limited company where I'm the director also, I have a customer where I used to provide consultancy services, now is more a monthy fee for maintenance and software subscription. I'm billing them in a monthly basis but I am wondering if I need to have a payroll for this. I'm considering to don't use a payroll to get money out of my Ltd, and do it through dividens at the end of the financial period. Do you have any caveat on this approach?

                    Regards.
                    More info is needed on this but yes you can pay dividends to yourself and not have a salary from your company. However, as others have mentioned, what other income do you have aside from your company? From income and tax point of view, we'd all need a bit more information from you to give you general advice. If you have a PAYE scheme set up in your company and you don't pay yourself a salary, you'll still need to submit an EPS each month through RTI. If you have a salary from elsewhere, how much is it? That would determine whether it's worth while putting through a salary from your company or just taking a dividend. Do you need the money from your company?

                    Comment

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