Best to pay no salary?

[Olly]

NLUK - I don't have an accountant to ask (yet) - I don't even have a signed contract role.
Everyone else,
It's been a long time since I closed my Ltd so I'm very rusty on all things HMRC but now I've been offered an outside IR35 role.
I have made sufficient NIC to qualify for a full state pension (I'm 50)
Would I be right in thinking there's no point paying myself a salary from my Ltd?
My current logic is pay £60k into a SIPP and then take up to the £37,700 minus other income as dividend and take no salary.
When I retire I can keep taking the dividend till there's nowt left.
Madness? Sensible? Something in-between?
Thanks

[jamesbrown]

Probably not sensible, given that salary is an allowable expense against CT, which is currently between 19% and 26.5%.

[sadkingbilly]

aren't pension contributions linked to salary? as in you can only pay max 100% of salary into pension?

[jamesbrown]

aren't pension contributions linked to salary? as in you can only pay max 100% of salary into pension?

No, that is for personal contributions, not company contributions.

[Olly]

Probably not sensible, given that salary is an allowable expense against CT, which is currently between 19% and 26.5%.

But isn't there NI and Apprenticeship levy to pay too? EDIT Ah, the NI is only after £5k next tax year. I guess the levy is on the lot.
Hmm...going to need to think this through more. I have other income from bank interest that's not insignificant to consider.

[northernladuk]

Where did you get the 60k in to SIPP from?

[jamesbrown]

But isn't there NI and Apprenticeship levy to pay too? EDIT Ah, the NI is only after £5k next tax year. I guess the levy is on the lot.
Hmm...going to need to think this through more. I have other income from bank interest that's not insignificant to consider.

There is no AL in your case, you're getting confused with big employers, including umbrellas. Anyway, yes, there is ErNI, but the CT saving is bigger, especially if YourCo qualifies for the NI allowance (but probably not).

Anyway, as you implied in your first post, this is routine work for an accountant who will have the full context, so I would focus on that. You don't need to have this planned before sorting the contract and getting an accountant, rather the opposite.

[Olly]

Where did you get the 60k in to SIPP from?

how do you mean?

[Craig@Clarity]

Obvs can't tell you what salary to pay yourself but here's something to think about.

You get a personal allowance of £12.5k. Say, for example, you pay or don't pay yourself £12.5k salary. If you don't pay a salary from your company, your profit would be £12.5k higher which means you would pay 19% CT. If you pay yourself £12.5k salary, your company profit is lower by £12.5k meaning you've saved yourself 19% on £12.5k.

In a different scenario, if you've already used up your personal allowance from other income, what if you paid or don't pay yourself £9k from your company. If you don't pay £9k salary, then profits are higher and you pay 19% CT. If you do pay a salary of £9k, you save 19% CT but you pay income tax at 20% on the £9k. Either way, HMRC get their ~ 20%......

[Olly]

Obvs can't tell you what salary to pay yourself but here's something to think about.

You get a personal allowance of £12.5k. Say, for example, you pay or don't pay yourself £12.5k salary. If you don't pay a salary from your company, your profit would be £12.5k higher which means you would pay 19% CT. If you pay yourself £12.5k salary, your company profit is lower by £12.5k meaning you've saved yourself 19% on £12.5k.

In a different scenario, if you've already used up your personal allowance from other income, what if you paid or don't pay yourself £9k from your company. If you don't pay £9k salary, then profits are higher and you pay 19% CT. If you do pay a salary of £9k, you save 19% CT but you pay income tax at 20% on the £9k. Either way, HMRC get their ~ 20%......

Thanks but why aren't you factoring in employers NI?