paying a salary while not trading

[Alan @ BroomeAffinity]

IR35 relates to the working practices between YourCo and ClientCo. If there is no ClientCo then there is no IR35 issue.

[ASB]

Not an issue if there is no contract being worked on.

Yes, of course. What I was meaning was that if the OP did any billable work they would still need to be considering the IR35 position on that which might scupper only paying 5k as salary.

[hgllgh]

Collect £350k in your business account then just take the rest of your life off and pay yourself £15k a year out the business. That's one of my (semi)retirement options/theories... (obviously put the money into a well paying interest account too).

even better .... get esc16 CGT to extract the 350K minus 10% tax and then get about 15K a year interest in a high interest account/ISAs etc.

That way the total sum of money is not going down by paying 15K a year....

[Likely]

Yes, of course. What I was meaning was that if the OP did any billable work they would still need to be considering the IR35 position on that which might scupper only paying 5k as salary.

ASB , thanks for the opinion but no where I suggested getting 5 K in salary only.

Most contractors pay at least 10 K in PAYE over an accounting year. The case is simply that I have paid 10K already. Does it make sense to keep paying salary in this case ? HMRC's PAYE botton line has been crossed already.

[VectraMan]

Most contractors pay at least 10 K in PAYE over an accounting year. The case is simply that I have paid 10K already. Does it make sense to keep paying salary in this case ? HMRC's PAYE botton line has been reached already.

Depends why you are doing it. If you're trying to pay as little tax, then no. If you're concerned about minimum wage, then you should keep paying it if you're still working (minimum wage is per hour, not for the year as a whole). If you think paying a larger salary is less likely to trigger an IR35 investigation, then toss a coin. Nobody really knows.

[VectraMan]

I was planning on doing something similar until my accountant advised against it. He reckons that HMRC might take a dim view of a small company accumulating hundreds of thousands of pounds in their bank account and drip-feeding it down to the shareholders/employees over a long period of time.

If what you're doing is completely legal, does it matter what view HMRC takes?

[chicane]

If what you're doing is completely legal, does it matter what view HMRC takes?

Because it's often the case that there's no such thing as legal/not legal where Hector is concerned. There are only grey areas potentially leading to drawn-out investigations where the criteria for investigation is unknown and the rules for compliance are defined on an ad-hoc basis.

[ASB]

ASB , thanks for the opinion but no where I suggested getting 5 K in salary only.

Most contractors pay at least 10 K in PAYE over an accounting year. The case is simply that I have paid 10K already. Does it make sense to keep paying salary in this case ? HMRC's PAYE botton line has been crossed already.

I didn't realise you had actally paid it all - I thought it's what you were proposing to pay. Still, theres always next year to reduce it to the minimum.

n.b. there has been huge debate about salary levels, I take the view that 5k is most effective. Make your own mind up though...

[Zen Contracting]

Going back to the OP's question there is no reason why you cannot continue to pay yourself a salary from your limited company even though the company is not billing. The most tax efficient method of doing this (in 08/09) is to take an annual salary of £5,435 (about £452 per month) and the rest as dividends. So long as the total of the salary and the grossed up dividend do not exceed £40,835 then there will be no more tax for the OP to pay.

Regards.

David.

[THEPUMA]

Going back to the OP's question there is no reason why you cannot continue to pay yourself a salary from your limited company even though the company is not billing. The most tax efficient method of doing this (in 08/09) is to take an annual salary of £5,435 (about £452 per month) and the rest as dividends. So long as the total of the salary and the grossed up dividend do not exceed £42,035 then there will be no more tax for the OP to pay.

Regards.

David.

Where do you get £42,035 from? I think you'll find it's £40,835.