Salary ups and downs

[FarmerPalmer]

Pay yourself a 'bonus' of 20K

Why don't you just shut the company down though - take a 10% hit on whats left in there ??

WHS - keep your salary the same but pay yourself a one of bonus each year should do it. - no different than any otehr company then

[rl4engc]

... or making any large capital/plant investments for the business, eg Company Car (super green and petrol ofc) or IT equipment?

But then you end up with a load of computers sat unused, not cool hard cash.

[mkant]

Ok. Could someone give me the idiots guide to the difference between dividend and bonus. Don't they amount to the same, from HMRC's pow?

Michelle

[Gonzo]

Ok. Could someone give me the idiots guide to the difference between dividend and bonus.

Not really. It is basic stuff.

You could have a look at sections 12 and 13 of this guide, it covers pretty much everything except makes the assumption that the goal is always to legally minimise the tax that needs to be paid.

http://www.pcg.org.uk/cms/index.php?...=27&Itemid=217

But as we all know, some people like paying tax, and this guide is not for them.

[expat]

Ok. Could someone give me the idiots guide to the difference between dividend and bonus. Don't they amount to the same, from HMRC's pow?

Michelle

A dividend is paid to shareholders, a bonus is paid to an employee.

So a bonus is part of the employee's salary: for the company, it represents a cost and is not liable to CT, but the payment is liable to Employer's NICs; for the employee it is part of salary and is liable to NICs and PAYE income tax.

A dividend is paid from profits and so for the company is liable to CT; for the employee it is dividend and not salary, so is liable to dividend income tax, but not liable to NICs.

[mkant]

Thank-you. Will go away and read and try to understand. Hate accounting .