I know its been asked before but optimum Dividends payment frequency / amount

[ASB]

because I pay myself £12k wages per annum.

Out of simple interest. Why 12k? Your choices are yours of course, but by doing this you are in fact handing over about 1000 more than strictly necessary.

[GreenerGrass]

There can't be many contractors starting out who can afford to take dividends only once a year. I shifted from monthly to quarterly once I had enough in reserve.

[lje]

I pay myself a salary of £15k. Combined with my hubby's money it means that we can live comfortably. Then I pay myself an annual dividend.

I know I pay extra tax that way but it fits the way that I live and makes life much easier.

[MrC]

given the general advice that there are concerns about HRMC I suggest the next priority is to get the money out ASAP and into an interest paying account as soon as you can. Business saving rates dont compete with personal ones.

I really dont see why spending too much too soon is an issue. WE all have to be pretty responsible in the work that we do. Why not make the maximum div payment at the start of the year straight into a personal savings account and then set up a monthly standing order from there into your current account. All you have to do then is not touch the savings account. Simples.

[Sally BFCA]

You can pay dividends once a year, once a day, just on months with 31 days, or on rainy days for no other reason than you want to cheer yourself up (I've done that before).

Makes no difference. Do whatever suits your personal finances best.

HMRC have recently been rumbling about disguised remuneration, after all, it is an easy target.

Ideally, the less frequent the dividends, the better. It is also advisable to pay them separately from salary and on differing days with differing amounts. If HMRC see that the same amount is drawn on a regular basis, it may draw their attention into investigating further.

As to the original question, the amount to draw in a lump sum should be in consideration of whether your allowances for 2009/10 at the lower tax band were utilised. You can earn £37,400 plus your personal allowance of £6,475 paying the lower rate of tax. Anything above that amount paid as a dividend will result in a further 22.5% tax due.

[Scrag Meister]

I pay mine quarterly, April, July, Oct, Jan.

[northernladuk]

HMRC have recently been rumbling about disguised remuneration, after all, it is an easy target.

Ideally, the less frequent the dividends, the better. It is also advisable to pay them separately from salary and on differing days with differing amounts. If HMRC see that the same amount is drawn on a regular basis, it may draw their attention into investigating further.

This annoys me so much. I understand where you are coming from but still annoys me. How does you deciding to pay yourself a monthly dividend in any way shape or form make you look like you are an employee. Just because monthly is easy and useful hence why companies pay their permies this way. It is just stupid. Comparing permie monthly pay and contract dividends monthly DOES NOT mean the contractor is hidden permie. It is just apples and pears. Just stupid.... <sigh> rant over...

[Sally BFCA]

This annoys me so much. I understand where you are coming from but still annoys me. How does you deciding to pay yourself a monthly dividend in any way shape or form make you look like you are an employee. Just because monthly is easy and useful hence why companies pay their permies this way. It is just stupid. Comparing permie monthly pay and contract dividends monthly DOES NOT mean the contractor is hidden permie. It is just apples and pears. Just stupid.... <sigh> rant over...

And I agree with you, but the P A Holdings case in 2009 was proved that dividends were not a return on investment but were in fact disguised remuneration.

[aceboy]

I pay mine quarterly, April, July, Oct, Jan.

+1