Maximise take home pay

[NotAllThere]

H
patricktroughton - ask whatever you want to - asking questions is the best way to learn.

Patricktroughton - do try to show that you've done a bit of research, and have applied some thought before asking questions. Otherwise, expect some flaming in proportion to the basicness/stupidity of the question...

[max]

Hi,

I'm a contracting newbie. I have a limited company with me as sole director and sole employee. I've been told the best way to run my limited company is to have a low salary (£10k), then take the rest as dividends. But taking dividends over £26k in a tax year incurs 25% tax, which is BAD! So anything over £26k should be left in the company. The company is then closed every 2 years and you apply for entrepreneur's relief through capital gains. This only incurs 0-6% (depending on circumstances).

Is this the best way to run a company? Are there any other ways to maximise take home pay? Also, doing things this way means I can only take £10k + £26k a year. How can I take more out of the company if I need it?

Thanks

Your strategy is pretty much sound, likely to be legal, although HMRC will hate you....they would prefer a blanket 60% of your revenue.

Your specific numbers will depend on your situation, ie: other income, like dividends, interest or rental income. It might be useful setting up spreadsheet to tweak the numbers.

[BrilloPad]

Ignore him. It was a perfectly sensible question. The only answers you'll get out of him will be rude and/or wrong.

IMO Mal is one of the best posters on here - he has some great insights. And is only rude where it is justified.

[NotAllThere]

IMO Mal is one of the best posters on here - he has some great insights. And is only rude where it is justified.

when he feels like it.

[BrilloPad]

when he feels like it.

Judging from the amount of flaming - either we get alot of newbies or Mal is married...

[malvolio]

...or both...?

Malvolio is not me, nor anything very much like me, to be honest. He started off as an experiment in building a very non-me persona and I kind of got stuck with him. And he is quite fun in a Frankensteinian kind of way.

As for newby-flaming - I absolutely do not do that. What I am is short with people who have clearly done no preparatory reading or research before crashing in with questions to which the answer is known or self-evident. And the logic behind that is that if you have to be spoon-fed at that level, you may just be in the wrong job.

And unlike The Puma and other professionals, whose knowledge and wisdom I respect greatly, I am no expert in any of the various disciplines, I just try to illustrate the real world to those who may not have had as many chances as me to observe it in operation.

[expat]

... What I am is short with people who have clearly done no preparatory reading or research before crashing in with questions to which the answer is known or self-evident. And the logic behind that is that if you have to be spoon-fed at that level, you may just be in the wrong job.

Is it unreasonable to ask that people read the FAQs, guides, and stickies before asking questions?

[SueEllen]

Is it unreasonable to ask that people read the FAQs, guides, and stickies before asking questions?

Apparently from the amount of threads asking the same questions-

YES

[Dow Jones]

Dumb posts

I wish we had more posters of the same calibre and knowledge as mal.
I have personally learnt a lot from his advice on various matters and I have had MyCo since 1994.
Nobody is perfect but he is always very close.
He is right to be annoyed by idiots.
How can anyone suggest that one way of maxing their profits is to shut the company every 2 years? WTF?
Also, 90% of qns asked have been previously dealt a few days/weeks before, so all the poster has to do is to perform a few searches and/or look at the links.
I find this as a general symptom of sloppiness and laziness which has lately prevailed in IT. Same as giving someone a 50 page spec document to read and comes back to ask if you could point him to the exact page!!