employed and working through Ltd Co

[katarino]

I am currently in PAYE employment, and also have a Ltd company for which I do a couple of days/month. Payment for these few days is made into the company and essentially parked. I pay tax at 40% on my PAYE income. A post below seemed to imply that my total earnings would be taxed at 40% irrespective of the fact that some had been paid to the company and not paid out. Seemed a touch harsh, but I am never surprised by the ingenious ways Mr Brown has of getting his hands on your hard earned...

Sorry a couple of quickies :

is there a site/piece of software that can indicate to me a good split between salary and divi (ignore pension issue) assuming I want to take some money out of the co. at some point.

Can I pay my wife a divi - as a shareholder and secretary ?

[tabletop]

You must read up on Section 660 asap

Section 660 is also called the "married couples business tax." The term has caused a great deal of controversy and media attention in recent months as people have been caught with tax-bills dating back several years.

Before you decide to distribute any of your cash, I suggest you get in touch with a decent Tax Consultant. Ask on the forum for recommendations.

This will be time well spent.

[4Contractors]

Re: You must read up on Section 660 asap

A very large number of contractors who operate outside of IR35 distribute part of their company dividend to their spouse.

If Section 660 were to be applied to these people, it would have almost as large an impact as IR35 itself. IMO it will be very difficult to apply Section 660 rules to these contractor companies. If Section 660 were to stick I would stop paying the split dividend, pay out salary and dividend to myself up to the high rate tax threshold and leave the rest of the money in the company.

What do the accountants/tax advisers think about this ?

[eAZy]

Dividends

As your Ltd Co. earnings are small fraction of your total income, I would suggest you take all your profit from the Ltd as dividends.

IR35 & S660A should not be an issue in this case as the amounts I assume are small relative to your PAYE income.

Get professional advice!