How to spend 100k contractor income

[contractor79]

Hi
I'm just interested in how you guys would split up a £100k contracting income.

Let me guess
Salary, 18k (max)
Dividend, 22k
Pension, 10k
Expenses/other 10k

that's 60k so far. 40k left
10k for corporation tax

this leaves 30k

so what do you guys do with the 30k? Keep it in there as a "reduncancy". Or pay loads into a pension. Or take it out as divs and invest in something more risky?

[malvolio]

Hi
I'm just interested in how you guys would split up a £100k contracting income.

Let me guess
Salary, 18k (max)
Dividend, 22k
Pension, 10k
Expenses/other 10k

that's 60k so far. 40k left
10k for corporation tax

this leaves 30k

so what do you guys do with the 30k? Keep it in there as a "reduncancy". Or pay loads into a pension. Or take it out as divs and invest in something more risky?

Erm.... That's £20k expenses, leaves £80k profit, at 20% CT (this year) means £16k CT to pay. £18k salary means you have to pay around 20% overall in PAYE and NICs, so there's another £3600.

So out of your £100k, you start with £60.4k. Take out £18k salary and £22k divis, you're left with £20.4k. Wanna try again?

Come on, these are basics: let's at least understand the process before you start worrying about how to spend it

[xoggoth]

£100k? I hate you.

[VectraMan]

Erm.... That's £20k expenses, leaves £80k profit, at 20% CT (this year) means £16k CT to pay. £18k salary means you have to pay around 20% overall in PAYE and NICs, so there's another £3600

Erm... £20K expenses and £18K salary (£20.5K with Employer's NI) leaves £59K profit and £11.9K CT = £47.1K - £22K divs = £25.1K left over.

Damn these basics.

[malvolio]

Erm... £20K expenses and £18K salary (£20.5K with Employer's NI) leaves £59K profit and £11.9K CT = £47.1K - £22K divs = £25.1K left over.

Damn these basics.

You assume gross salary, I assume net. Given the OP doesn't understand the process too clearly, which is the safer bet?

[blacjac]

You assume gross salary, I assume net. Given the OP doesn't understand the process too clearly, which is the safer bet?

Why does gross or net make a difference as to weather or not you use it in the CT calculation?

[VectraMan]

You assume gross salary, I assume net. Given the OP doesn't understand the process too clearly, which is the safer bet?

Glad Blacjac picked up on the point you missed entirely.

And I assumed £18K referred to net, not gross.

Oh dear.

[malvolio]

Why does gross or net make a difference as to weather or not you use it in the CT calculation?

It doesn't. I hope the OP is talking about 18k for salary/PAYE/NICee and NICer, but we can't actually be certain. But if it's £18k to the OP's bank account, has he allowed for it in working out the profit figure and hence his CT bill?

As always, I'm just making sure people ask all the questions. Doesn't mean my answer is right, or even intended to be right, does it?

[VectraMan]

As always, I'm just making sure people ask all the questions. Doesn't mean my answer is right, or even intended to be right, does it?

That answer is worthy of a New Labour minister.

[blacjac]

It doesn't. I hope the OP is talking about 18k for salary/PAYE/NICee and NICer, but we can't actually be certain. But if it's £18k to the OP's bank account, has he allowed for it in working out the profit figure and hence his CT bill?

As always, I'm just making sure people ask all the questions. Doesn't mean my answer is right, or even intended to be right, does it?

So why did you miss it out then?