Do tax increases make Dividend/low salary model no longer makes sense?

**jamesbrown** · 11 April 2023, 16:02

Originally posted by Mavis View Post

I've been quite depressed how much tax I've been paying lately

Why? It mean you're earning a lot.

Anyway, your calculations are wrong if you came to that conclusion (they probably don't factor ErNI, which isn't seen by employees but is nevertheless paid by them, ultimately, and will be by YourCo too).

**northernladuk** · 11 April 2023, 17:33

Originally posted by Mavis View Post

I've been quite depressed how much tax I've been paying lately, and decided to use some online calculators to see what exactly is going on.

Only two things that are for certain in life. Death and taxes. We earn a hell of a lot so are going to be stiffed for some level of tax.

I have calculated (Using these calculators that:
If a contractor with a limited company earns 100K, and uses the below NI threshold model for salary and the rest in dividends, that contractor is about 7K worse off than if they earned that 100K in salary.
So does this mean that I might as well pay myself everything in salary, pay no corp tax on my limited company because all my salary is an expense, and forget about dividends? This is what I'm seeing.
Has anybody else concluded this? And does anybody have an accountant that is not an online bot company that might actually develop a personal tax plan, taking into account this kind of information?
Thanks

Why do you not have an accountant already? Not sure what these online bot companies are but there are plenty of decent ones around. Never heard of an accountant not doing a tax plan. It's pretty simple tbh. The salary numbers move a little every budget but the exact numbers are all out there on the web.

If you don't have an accountant then get yourself one. We have an accountant recommendation list sticked at the top of this very part of the forum.

**northernladuk** · 11 April 2023, 17:36

P.s. might be a slip of the fingers but the link you posted is to a directory of paid adverts for accountants. Mods don't tend to like new posters linking to advertised lists in their first post. I'm sure once they are done eating children or slaughtering goats for ritual sacrifice they'll be along shortly.

**NotAllThere** · 11 April 2023, 17:54

Meh. Looks like an innocent mistake. I'll put the goat back.

**Mavis** · 12 April 2023, 09:00

The link I posted was contractorcalculator.co.uk. I use those calculators to try and put aside enough tax as I earn.
So jamesbrown, thanks for that ErNI insight. Yes - it probably isn't factoring that in.

So in terms of looking for an accountant - I'm looking for an actual person - not an online system. I've used these systems for years and it's not personalised advice. When I worked in Germany a friend recommended an accountant, and I went over to his apartment, had a great chat, and he completely transformed my economic reality by optimising my taxes. That's what I'm looking for. I guess I'm old school.

**northernladuk** · 12 April 2023, 09:15

Originally posted by Mavis View Post

The link I posted was contractorcalculator.co.uk. I use those calculators to try and put aside enough tax as I earn.
So jamesbrown, thanks for that ErNI insight. Yes - it probably isn't factoring that in.

So in terms of looking for an accountant - I'm looking for an actual person - not an online system. I've used these systems for years and it's not personalised advice. When I worked in Germany a friend recommended an accountant, and I went over to his apartment, had a great chat, and he completely transformed my economic reality by optimising my taxes. That's what I'm looking for. I guess I'm old school.

Time to get the yellow pages out then but based on actual experience, I'd take a contractor accountant I'll probably never meet over some local random bod that doesn't know contracting any day.

If you want to pick the phone up and talk to your actual qualified accountant rather than juniors I'd say speak to Sarah Solo at PaperRocket. Still small enough to actually speak to her or Nikki directly. Nikki won best accountant and Paper Rocket have been put up for the award of best small accountants three years running. Sounds like the best compromise you are going to get without going for some random accountant.

**Mavis** · 12 April 2023, 09:41

Thanks NorthernLad for the tip.

**Guy Incognito** · 13 April 2023, 07:55

Max out your pension, pay less tax.

Do tax increases make Dividend/low salary model no longer makes sense?