Advise needed

[kknandoo]

Hi guys,

Me and my wife both have been contractors for the past 2 years and we run through Ltd. co. Wife is going permie from April, with £33K pa. Wondering what the best possible way for me?

I could only get £35K ( sal + divs) or any otheway to extract more with less tax implications?

Many Thanks for any suggestions.
Nandoo

[kaiser78]

Hi guys,

Me and my wife both have been contractors for the past 2 years and we run through Ltd. co. Wife is going permie from April, with £33K pa. Wondering what the best possible way for me?

I could only get £35K ( sal + divs) or any otheway to extract more with less tax implications?

Many Thanks for any suggestions.
Nandoo

Have you spoken to your accountant about this ? You also probably need to clarify exactly what info/suggestions you are after.

[kknandoo]

I am basically looking whether £35K is the max that can draw as a salary / divs or can I take more but not paying higher tax?

Have not spoken to Accountant yet. will do soon

- Nandoo

[TheFaQQer]

I am basically looking whether £35K is the max that can draw as a salary / divs or can I take more but not paying higher tax?

Have not spoken to Accountant yet. will do soon

- Nandoo

No, 35k is not the maximum you can take without paying higher rate tax. The upper tax band begins as £37400 this year.

[Maslins]

No, 35k is not the maximum you can take without paying higher rate tax. The upper tax band begins as £37400 this year.

Worth clarifying this £37,400 is on top of the personal allowance of £6,475. Therefore you reach higher rate tax on total annual personal income of £43,875.

[TheFaQQer]

Worth clarifying this £37,400 is on top of the personal allowance of £6,475. Therefore you reach higher rate tax on total annual personal income of £43,875.

I thought "I'm sure I earned more than that without paying higher tax rates" when I posted it. I blame the website I read it on for not being clearer

[Clare@InTouch]

I am basically looking whether £35K is the max that can draw as a salary / divs or can I take more but not paying higher tax?

Have not spoken to Accountant yet. will do soon

- Nandoo

You could look at pension contributions too - obviously only worth while if you want to extract the money but not actually have it to hand for a few years.

[ChimpMaster]

It's not clear whether you run through the same Ltd or not, but assuming you do and that you each have an equal share, and making the assumption that 33k is her only (permie) income, you could:-

1) Pay yourself 33k salary and then pay a dividend of ~10k.
2) Set up different share classes for you and your wife within the Ltd and choose a lower salary for yourself. Then pay yourself a higher dividend and her a 10k dividend.

Of course IANAA etc.

[kknandoo]

Thank you all for your replies. Did't know that its £6745 + £37K. Need to confirm this with Accountant.

Regards
Nandoo

[escapeUK]

If you see you might have a period where you wont be going into the 40% tax band, you could leave the money in the business and take it in the next tax year?

I think this is what I would do, I dont need the money and its unlikely any interest I could get would be as much as the 20% tax lol

Also that £1000 server sounds much more appealing when it only costs £600 as the rest is tax you would have paid. ( I like servers ) Especially the 1U ones they are sexy lol