How much salary do you take from your Ltd?

[Lumiere]

You can do it online instead if that makes it easier:

http://www.hmrc.gov.uk/payinghmrc/paye-nil.htm

Yep, that's what I do. Still one has to remember to do it every month before the deadline, so the process is open to failure.

I am hesitant to call the Revenue as it may put me on their radar. Maybe I am being over paranoid, but it looks like admitting "I am intentionally not going to pay you any NI this year" rather than "Sorry guys, no NI this month".

[Olly]

Yep but I didn't phrase it like that....I just said I don't work many hours and it's likely only to be in the 4th quarter I owe them anything. All completely true.

I'm sure they do have "factors" to help them guide investigations but can't imagine that being one of them. Must be quite a few little used companies in similar boat. Doesn't strike me as a good pointer.

If I were HMRC looking for contractors I'd be searching my DB for Ltds with high turnover, low wages bill, high share dividend relative to wages etc etc et
.....frequency of NI declaration would not need to be part of my query.

[mavster07]

So do we just need to advise the HRMC yearly then ?

[XLMonkey]

Ok to me this sounds like a silly question but I'll ask anyway .

For argument's sake lets say I have a Ltd company and it makes £5,715 gross... if I pay that to myself as a salary I keep all of it as there is no NI/PAYE, and no corp tax either as its an expense. However if I paid that as a dividend I'd have to pay 21% corp tax first and therefore lose out on £1,200?

Not a silly question at all. You may be better off if your total income is below 5,715; but don't forget that total income will also include any other money you earned whilst you were abroad (since you will probably have to pay income tax on that as well).

You are right that salary is treated as an expense, so you are avoiding 21% corporation tax. However, you are incurring both employers and employees NI contributions as well as income tax. So, the marginal tax rate on every PAYE pound you pay yourself is:

0 - 5,715 : 0%

Between 5,715 and your personal allowance level (usually 6,475) : 23.8%
(11% employee NIC plus 12.8% employer NIC)

Between your personal allowance to the upper earnings limit for NIC (usually 43,888) : 43.8%
(11% employee NIC, 12.8% employer NIC, 20% income tax)

As a result, you are better off paying the corporation tax on any income above 5,715, as compared with paying yourself a higher salary.