Skint - pay rise or extra divis?

[Zorba]

Here goes -

I'm completely strapped as I'm trying to stay under the 40% and keep the money in the company. However, it's come to the point where I'm going to have to get some extra out to cover me until April. My accountant says go for the divis as the rise will cost me more. However, my current wage doesn't really cover my monthly living costs. I pay myself around the 9600 quid a year net mark at the moment.

So: do I go with the extra divis, a rise, or a combo of both?

[Ardesco]

Listen to your accountant.

There is no point in earning more than your tax allowance each year if you want to pay the absolute minimum in tax. Remember if you take money out as wages you pay employers and employee's tax and NI, if you take money out as dividends it is less.

[dude69]

Listen to your accountant.

What he said.

If you pay more salary, then you will pay NI on it. And your dividends will be moved into 40% bracket.

NI is the killer.

No NI on dividends

[KentPhilip]

How about getting your company to give you a loan to tide you over until April. Then a big divi after that, and pay back the loan.

[BrowneIssue]

How about getting your company to give you a loan to tide you over until April. Then a big divi after that, and pay back the loan.

I got told by my accountant circa 2000 that such practices are illegal (which I find hard to believe).

[EqualOpportunities]

I got told by my accountant circa 2000 that such practices are illegal (which I find hard to believe).

How about getting your company to give you a loan to tide you over until April. Then a big divi after that, and pay back the loan.

I periodically take a Director's loan, and my accountant has never bitched...

[r0bly0ns]

I have used the directors loan facility to both borrow money from and lend money to the company.

All with the accountants advice.

[Diver]

I keep having to lend the company money and then claw it back.

coz I keep forgetting my company card pin (4 times so far )or forgetting to take the company cheque book

[dude69]

I got told by my accountant circa 2000 that such practices are illegal (which I find hard to believe).

I believe you should pay back loans over £5k in the financial year. Anything under £5k is ok.

Don't quote me on the exact numbers or time frames.

You can also have a separate season ticket loan of up to £5k, not sure abot paying that one back. This is a tax-free employee perk, nothing to do with being a director.

[Gonzo]

Strictly speaking, the Directors Loan Account is for Directors to lend money to the company.

However I understand that it is quite common to overdraw it (i.e. for the director to borrow from the company).

But there are limits - you need to check these out because I am not an expert, but never borrow more than £5K from the company and always make sure that nothing is outstanding at the company year end.